As companies turn to technology to cut costs, artificial intelligence has emerged as a leading driver of layoffs in 2025.
According to consulting firm Challenger, Gray & Christmas, AI was responsible for nearly 55,000 layoffs in the U.S. this year. Overall, 1.17 million job cuts were recorded in 2025, the highest level since the Covid-19 pandemic in 2020, when 2.2 million layoffs were announced by year-end.
In October, U.S. employers announced 153,000 job cuts, followed by over 71,000 in November, with AI cited for more than 6,000 of those, according to Challenger.
As inflation continues to bite and tariffs raise operational costs, companies have turned to AI as a short-term cost-cutting solution. A November study by the Massachusetts Institute of Technology found that AI could already perform the work of 11.7% of the U.S. labor market, potentially saving up to $1.2 trillion in wages across finance, healthcare, and other professional services.
However, not everyone is convinced that AI is the main driver of these job cuts. Fabian Stephany, assistant professor of AI and work at the Oxford Internet Institute, told CNBC that it may be more of an “excuse”.
“It’s to some extent firing people for whom there had not been a sustainable long-term perspective. Instead of acknowledging miscalculations from two or three years ago, companies may point to AI as the scapegoat”, he added.
Stephany explained that many companies that thrived during the pandemic “significantly overhired”, and the recent layoffs might simply represent a market correction.
Top firms that cited AI as part of their layoff and restructuring strategy in 2025 include: Amazon, Microsoft, SalesForce, IBM, Crowdstrike and Workday.
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