Tech Giants Including Microsoft, Alphabet, PayPal Slashed 34,000 Positions For Generative AI Investment In 2024: Report

In a strategic move to invest in generative artificial intelligence (AI), major tech companies have collectively cut 34,000 jobs since the beginning of 2024.

What Happened: Companies such as Microsoft Corp (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), PayPal Holdings Inc (NASDAQ:PYPL), and eBay Inc (NASDAQ:EBAY) have been restructuring their workforces to focus on AI, reported the Financial Times.

Analysts believe that these layoffs are part of a broader trend in the industry, where companies are reevaluating their workforce and reallocating resources to invest in new technologies. This move is also seen as a demonstration of the companies’ commitment to cost discipline.

According to Layoffs.fyi, a website that tracks job cuts in the industry, a total of 138 tech companies have laid off staff this year. This number is significantly lower than the 263,000 job cuts that occurred in 2023, following a period of over-investment during the pandemic.

"Anybody working in tech or games right now is worried about lay-offs to some degree, either for themselves or someone they know," said Autumn Mitchell, a quality assurance tester at Microsoft video game subsidiary ZeniMax. "You see one company announce lay-offs and think ‘Here we go, who's it going to be next week?'" 

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Companies are also re-evaluating their investment priorities and cutting positions in non-core divisions. For example, Amazon.com Inc (NASDAQ:AMZN) has cut hundreds of jobs in its Twitch video streaming platform.

Why It Matters: The tech industry has been experiencing a significant shift in employment trends. After a period of massive hiring during the pandemic, the industry saw a wave of layoffs in 2023, with companies like Microsoft and Meta Platforms Inc (NASDAQ:META) announcing thousands of job cuts.

Despite a declining trend in tech layoffs during the second half of 2023, the trend reversed in January, with the number of employees laid off in the tech sector increasing by 304%. This trend has been attributed to various reasons, including restructuring, cost-cutting, and a push for a leaner organization.

Amid these layoffs, tech companies are also making significant changes in restructuring and investments in AI. Google, for instance, estimates that it will spend $700 million in the first quarter of 2024 on employee severance amid a flurry of layoffs in the tech industry.

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