Shares of Meta Platforms (META.O) jumped nearly 3% on Monday after a Reuters report suggested the social media giant could be planning to lay off 20% or more of its workforce. The potential move comes amid the company’s massive investments in artificial intelligence (AI) and an ongoing push to boost productivity through technology.
If the 20% figure is confirmed, this would mark Meta’s largest staff reduction since its 2022–2023 “year of efficiency” restructuring, which saw approximately 21,000 employees let go. The report highlights the growing impact of AI on large tech companies, as Meta aims to recover from lagging behind rivals in the AI race.
Meta has spent heavily in recent years to catch up in AI development, including building state-of-the-art data centers and engaging in a global talent war for AI engineers. The company’s projected capital expenditure for 2026 is up to $135 billion,roughly double last year’s spending, reflecting its commitment to expanding AI capabilities.
A significant portion of this budget, up to $27 billion, will be spent on cloud services from Nebius, necessary to train and run its AI models.
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Despite these investments, Meta has yet to launch an AI model that can directly compete with industry leaders like OpenAI, Anthropic, or Google. Its latest AI project, codenamed “Avocado,” has reportedly underperformed initial expectations, which may be contributing to the need for cost-cutting measures. Analysts estimate that a 20% workforce reduction could save Meta about $6 billion and potentially increase adjusted core earnings by around 5%.
AI-driven layoffs are not unique to Meta. Globally, companies have announced more than 61,000 job cuts linked to AI since November 2025, including major firms such as Amazon and Australia’s Wisetech.
Some industry observers argue that AI is being used as a convenient reason for layoffs that may have been planned anyway. Bernstein analyst Mark Shmulik noted, “Is AI a convenient scapegoat for cuts that might have happened anyway? Perhaps. But the market will quickly see through companies using AI as camouflage.”
Meta currently employs around 79,000 people. While the company has declined to confirm the report, stating it is “speculative reporting about theoretical approaches,” the stock has experienced a 7% decline so far this year after a strong performance in 2025.
The move reflects broader trends in tech as companies adapt to AI’s increasing role in business operations, while also balancing cost pressures and workforce management. Analysts have suggested that Meta is among the best-positioned incumbents to transition toward an AI-enabled organization, given its resources, prior restructuring experience, and strategic focus on innovation.
As AI continues to reshape the tech landscape, companies like Meta are under pressure to demonstrate both technological leadership and financial discipline, a balancing act that could redefine employment patterns across the industry in the coming years.
