Artificial Intelligence Makes Tech Layoffs the "New Normal"

Wedbush analyst Dan Ives said, "We are now seeing more repositioning of large tech companies, doubling down on their spending on artificial intelligence while cutting back on non-strategic initiatives."

For analysts, all eyes will be on artificial intelligence as Microsoft, Meta, Google, and Amazon release their results in the coming days.

According to layoffs website Layoffs, which tracks the tech industry in California, a total of 260,000 jobs were lost in the tech industry last year.

The website shows that in just four weeks this year, 93 companies have laid off 24,584 people.

Google CEO Sundar Pichai warned employees on January 18 that the search engine giant would be laying off employees as it focuses on new priorities, including artificial intelligence.

Pichai told his employees, "We have ambitious goals and will be investing in our key priorities this year."

"The reality is, to create the ability to make this investment, we must make difficult choices."

As early as January, Google allowed employees to enter numerous departments, including advertising sales, search, shopping, maps, policy, core engineering, and YouTube teams.

Nevertheless, these layoffs are far from the situation last year after Christmas when Google laid off 12,000 people.

Around that time, Amazon also cut tens of thousands of jobs, and this wave is still ongoing as Amazon announced layoffs in its entertainment and streaming division this month.

Microsoft announced the layoff of nearly 2,000 employees in its gaming division as a result of its major acquisition of Call of Duty maker Activision Blizzard.

Ebay, Salesforce, Duolingo, and dozens of other companies have also reduced their workforce, as cash-strapped startups struggle to secure funding in a high-interest rate environment.

According to layoffs website creator Roger Lee, the main driver behind these large-scale layoffs is still the over-hiring of previous years.

He pointed out that there may also be a mimetic effect, where companies lay off employees in response to competitors' layoffs, seeking the tacit approval of Wall Street or venture capitalists who appreciate rational spending.

Lee said, "This may encourage tech companies to cut costs and lay off employees."

Wedbush investor Ives said that when it comes to spending decisions, investors "like to see adults in the room."

He added, "This sends a cautious message to investors and is generally well-received on Wall Street."

Layoffs estimates that about 20% of job losses are due to artificial intelligence and related restructuring.

Silicon Valley jobs are on the front lines, with some coding tasks primarily being done by AI.

John Blevins, a visiting lecturer at Cornell University's Johnson School of Business, said, "The wave of using AI to improve business operations will impact every industry in every country."

"The tech industry is moving faster than most other industries, it's just the first to be disrupted by AI."