The US tech sector recorded its worst month for job cuts in two years this May. Nearly 38,242 workers lost their jobs. That is the highest monthly total since July 2023. No other sector came close to those numbers.

Artificial intelligence was the most frequently cited reason for the layoffs. Companies said they were restructuring to prioritize AI investments. Many roles in software development, customer support and content creation were eliminated. Several firms openly stated they were replacing employees with AI tools.

The Data Behind the Cuts

The May total represents a sharp spike from recent months. Tech layoffs had been trending downward since early 2024. But the May surge reversed that trend. More than 40% of all US layoffs announced in May came from the technology industry. That is the highest share for any sector in two years.

Analysts point to a shift in corporate strategy. Instead of broad belt tightening, companies are now making targeted cuts. They are eliminating teams that overlap with AI capabilities. They are also reassigning budgets from traditional engineering to machine learning projects.

Why AI Is Blamed

AI automation is now mature enough to handle tasks once done by humans. Customer service chatbots, automated code generation and content tools have improved rapidly. Companies like Google, Microsoft and Meta have all reduced headcount in areas that AI can now manage. The trend is accelerating as competition over AI leadership intensifies.

The layoffs are not limited to big tech. Startups and mid-sized companies are also cutting jobs. Many cite the high cost of AI development. They say they must redirect spending from people to compute power and model training.

Why This Matters

These layoffs affect thousands of skilled workers in a short period. The job market for tech employees is tightening even as the broader economy remains stable. Workers face longer job searches and more competition. The rise of AI is reshaping employment in ways that go beyond one month of data. It signals a structural shift that could keep layoffs elevated for quarters to come.

Regulators and labor groups are paying attention. Some question whether companies are using AI as a cover for cost cutting. Others worry about the social impact of rapid automation. For now, the trend is clear. AI is not just a tool for innovation. It is a driver of workforce reduction.