By Nate Wolf
Companies increasingly have been pinning mass layoffs on the use of artificial intelligence, just as many AI skeptics feared. Whether the technology is a reason or an excuse may be besides the point.
AI was the leading reason U.S.-based employers cited for layoffs in March, according to data from outplacement consultancy Challenger, Gray & Christmas. AI accounted for 25% of layoffs tracked in March and 13% in the first quarter, up from just 5% throughout 2025.
Snap became the latest high-profile name to slash jobs, laying off around 16% of its full-time workforce. In a letter to staff, CEO Evan Spiegel said "rapid advancements in artificial intelligence" had enabled more streamlined workflows.
The social media company joined technology peers like Block, Atlassian, and Pinterest in citing AI in layoff announcements this year, but the trend goes beyond the tech sector. Dow Inc., the chemicals supplier, said in January it would cut around 4,500 workers and lean into AI and automation.
"Other industries are testing the limits of this new technology, and while it can't replace jobs completely, it is costing jobs," said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas.
That trend isn't yet rocking the overall labor market, which showed solid growth in March after a weak February. But workers may feel uneasy that investors are mostly rewarding large, public companies for pulling the layoff lever. Then again, the market loves lower costs and higher margins, no matter the cause.
"Our conversation with institutions and investors has consistently pointed to a key theme: Many companies over-hired during Covid and use AI as an excuse, and more layoff announcements will follow," Clear Street fintech analyst Owen Lau wrote in a research note last month.
Out of 100 institutional investors surveyed by research firm Just Capital, just 10% expected large-scale job losses, compared to 30% of the general public. The disparity may suggest that investors see layoffs -- whether driven by AI or not -- as targeted cost-cutting rather than a warning sign for the labor market.
The AI excuse could become less effective at some point, Lau argued. To start, politicians could wield AI-driven layoffs as a political cudgel against businesses during the upcoming midterm cycle. Furthermore, citing AI as a reason for cuts will lose its luster among investors as more and more companies use the same tactic.
Then again, some of the recent layoff announcements have included details about AI usage that aren't the usual platitudes. Salesforce confirmed last September that the company cut 4,000 customer support roles because its AI agent, Agentforce, could backfill support engineer roles.
Snap, meanwhile, noted Wednesday that 65% of its new code is generated by AI. Its code review agent has identified more than 7,500 bugs, freeing up engineers to "concentrate on higher-value work."
The pair may just be a few steps ahead of other companies.
"On AI, the disruption narrative has moved faster than actual implementation," wrote Michael J. Wilson, an equity strategist at Morgan Stanley, in a note Sunday. "AI looks more likely to support, rather than compress, margins, particularly for early adopters. It also gives companies an excuse and an incentive to keep hiring low."
Markets won't care whether it is an incentive or an excuse as long as the touted cost savings are real. As for the broader labor market, the impact of AI will become clearer as more companies adopt the technology at scale. Until then, workers are in a tricky spot.
Write to Nate Wolf at nate.wolf@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 15, 2026 12:52 ET (16:52 GMT)
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