Key Takeaways

  • Artificial intelligence was the top reason for U.S. corporate layoffs for the third consecutive month in May, with a record 38,579 job cuts attributed to AI, according to a report released Thursday by outplacement firm Challenger, Gray & Christmas.
  • That figure marks the highest monthly total since the firm began tracking AI-related layoffs in 2023. AI-related cuts accounted for 40% of all layoff announcements in May, up from 26% in April and 7% in January.
  • "The labor market is being reshaped by technology in real time," Andy Challenger, chief revenue officer of the Chicago-based firm, said in the report. "AI is now the top reason companies cite for layoffs, and the industry citing it most is the tech sector."

Deeper Dive

While economic uncertainty, restructuring efforts, and market conditions continue to drive job cuts, AI has become the most frequently cited reason for layoffs in recent months.

So far this year, employers have cited AI in 87,714 planned layoffs, accounting for 22% of all announced job cuts in 2026. This total has already surpassed the 54,836 AI-related layoffs recorded for all of 2025.

Coinbase CEO Brian Armstrong announced in May that the company plans to cut 14% of its workforce, attributing part of the decision to AI. In a memo to employees later shared on social media platform X, he said: "Over the past year, I've seen engineers use AI to accomplish in days what used to take teams weeks. Non-technical teams are now shipping production code, and many of our workflows are being automated. The speed achievable by small, focused teams has changed dramatically, and it's accelerating every day."

Meanwhile, Cisco Systems said last month it plans to cut nearly 4,000 positions—less than 5% of its workforce—as part of a broad restructuring aimed at focusing on AI and other high-growth areas.

Although tech companies dominate layoff announcements, they are also among the most active industries in hiring plans. According to the Challenger report, the tech sector led hiring in May with 11,250 announced positions, followed by the electronics industry (3,158) and the insurance industry (1,435).

Overall, U.S. employers announced 397,755 layoffs in the first five months of the year, down 43% from 696,309 in the same period in 2025. Federal workforce reductions in 2025 had pushed total job cuts to historic highs. Challenger said: "Excluding that distortion, layoff levels in 2026 are roughly on par with 2024, when 385,859 layoffs were announced in the first five months."