Meta and Microsoft Plan Significant Reductions Amid Increased AI Investment
Meta and Microsoft Cut Thousands of Jobs Amid AI Spending Spree
Meta Platforms Inc. and Microsoft Corp. have taken drastic measures to trim their workforces as they continue to pour billions into artificial intelligence infrastructure. In a move to streamline operations and offset heavy AI spending, Meta plans to cut 10% of its workforce, approximately 8,000 employees, starting on May 20. The company also announced that it will not fill 6,000 open roles.
Earlier in the day, Microsoft issued a memo offering voluntary buyouts to thousands of its US employees. Approximately 7% of the US workforce, around 8,750 workers, will be eligible for the program. This marks a significant departure from the company's previous approach to layoffs, with the person familiar with the planning noting that Microsoft has never done buyouts on this scale.
The Big Tech Spending Spree
Big tech companies have been racing to trim their expenses as they invest heavily in data centers and other infrastructure to meet demand for artificial intelligence services. Microsoft is constructing data centers around the world and has announced new AI investments in Japan and Australia this month. Meanwhile, Meta has projected record capital expenditures this year and has announced several multibillion-dollar deals with AI partners over the past few months.
| Company | Employees | Layoffs or Buyouts |
|---|---|---|
| Meta | 80,000 | 10% (8,000 employees) |
| Microsoft | 125,000 | 7% (8,750 employees) |
| Company | Employees | Layoffs or Buyouts |
|---|---|---|
| Meta | 80,000 | 10% (8,000 employees) |
| Microsoft | 125,000 | 7% (8,750 employees) |
| Company | Employees | Layoffs or Buyouts |
|---|---|---|
| Meta | 80,000 | 10% (8,000 employees) |
| Microsoft | 125,000 | 7% (8,750 employees) |
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Both companies have instituted several rounds of layoffs in recent years. In its memo, Meta cited its AI spending as a reason for the layoffs, stating that it is necessary to run the company more efficiently and offset other investments. Microsoft's buyout program is being offered to workers whose years of service plus their age totals 70 or more, excluding some senior roles or those on sales incentive plans.
The companies are scheduled to report quarterly earnings on April 29.
Investor Takeaway
Big tech companies are reducing their workforces to offset heavy spending on AI, which may impact their short-term profitability.
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