March 16 - Shares of Meta Platforms rose about 3% on Monday after a report said the company is considering cutting 20% or more of its workforce as it attempts to balance steep artificial intelligence-related spending with productivity gains driven by AI.
If Meta finalizes a 20% reduction, it would mark the largest personnel trimming since the company’s late 2022 and early 2023 restructuring - described at the time as a "year of efficiency" - which removed roughly 21,000 positions. The prospective cuts come as Meta has been investing heavily to catch up in AI, building data centers and competing aggressively for talent.
Meta projects capital expenditures of up to $135 billion in 2026, a figure the company says is roughly double the prior year’s spending. Much of that outlay is intended to provide the cloud capacity required to train and operate large AI models. As part of that push, Meta agreed to spend up to $27 billion on cloud services from Nebius under a recent deal.
While the increased investment has supported improvements to Meta’s advertising tools and has contributed to revenue growth, the company has not yet produced an AI model that challenges leaders such as OpenAI, Anthropic and Google. Meta has been developing a model called Avocado, but its performance has reportedly fallen short of expectations.
Analysts have attempted to quantify the financial impact of a significant headcount reduction. Barton Crockett, an analyst at Rosenblatt Securities, estimated that a 20% workforce cut could translate into approximately $6 billion in cost savings, equal to about a 5% uplift to adjusted core earnings. Crockett also noted, "This doesn’t have to stop at 20%. There could be more down the road if AI is truly this impactful on staff productivity."
The company, which reported a workforce of 79,000 at the end of December, responded on Friday to requests for comment by saying, "this is speculative reporting about theoretical approaches." Its stock was trading at $631.5 in premarket activity. Year-to-date the share price has fallen 7%, after climbing nearly 13% in 2025.
Job cuts tied to AI have been rising across industries. Since November, companies have announced more than 61,000 AI-related job eliminations, including moves at Amazon and Australia’s Wisetech. The question of whether AI is directly displacing workers or simply serving as a proximate explanation for layoffs has intensified after Block CEO Jack Dorsey disclosed plans to cut nearly half of his company's staff, saying the technology has changed "what it means to build and run a company."
OpenAI CEO Sam Altman commented last month that some companies were attributing layoffs to AI for reductions they may have planned regardless. Bernstein analyst Mark Shmulik observed, "Is AI a convenient scapegoat for cuts that might have happened anyway? Perhaps. But we believe the market will quickly see through companies using AI as camouflage." Shmulik also described Meta as "probably the best placed incumbent to pivot to an AI-enabled organization," citing the company’s past restructuring success.
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Contextual note - This story presents the reported proposals and the public responses and commentary available at the time. It reflects the range of market reaction, analyst estimates, company comment, and sector-wide developments tied to AI-related workforce changes.