AI tied to 40% of U.S. layoffs in May; 2026 AI cuts top 2025

Challenger, Gray & Christmas reported AI was cited in 38,579 U.S. job cuts in May, accounting for 40% of the 97,006 layoffs announced that month. The firm’s tracking, begun in 2023, recorded AI as the most-cited reason for layoffs for the third straight month.

For the year to date, employers have linked 87,714 cuts to AI, about 22% of the 397,755 job cuts announced so far in 2026. The AI total already exceeds the 54,836 AI-related cuts recorded for all of 2025.

AI’s share of monthly cuts rose from 7% in January to 26% in April and 40% in May. Total announced U.S. job cuts in May were the highest for that month since 2020 and marked the third consecutive monthly increase. Technology companies led sectors with 38,242 cuts in May and remain the largest source of layoffs this year.

Companies outside large technology firms are citing AI as they reorganize operations. Financial-technology companies reported 5,731 cuts in May, with most announcements naming AI. Banks are planning automation-driven reductions; Standard Chartered plans to cut about 7,800 back-office roles by 2030 as it scales automation.

Challenger’s methodology records when employers explicitly name AI or automation in layoff announcements rather than inferring causes. The firm reported employers announced 397,755 job cuts so far in 2026, down 43% from 696,309 announced over the same period in 2025; the 2025 total was inflated by large federal workforce reductions.

Andy Challenger, chief revenue officer at Challenger, Gray & Christmas, noted: “AI isn’t yet the jobpocalypse some predicted. Like spreadsheets and email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason.”

Investment in automation tools and generative AI systems is cited as a driver of restructuring in back-office, customer service and other repeatable tasks, prompting some firms to eliminate roles while shifting resources to AI projects.