Meta up nearly 3% in premarket as it plans mass layoff to offset increased AI spending

In premarket trading on Thursday, Meta's shares saw a notable increase of nearly 3%, following news that the company may reduce its workforce by over 20% to manage its escalating AI expenditures this year. While specific details of the layoffs remain unconfirmed, sources familiar with the situation revealed that senior leadership has been instructed to devise plans for significant staff reductions. As of December 2025, Meta employed approximately 79,000 individuals, meaning that the potential layoffs could impact more than 15,000 workers. This would mark the largest downsizing since late 2022, when CEO Mark Zuckerberg announced the elimination of 11,000 jobs as part of a broader cost-cutting initiative. A Meta spokesperson commented on the situation, describing the report as speculative and related to theoretical strategies. The looming job cuts come as the tech giant intensifies its focus on developing costly AI infrastructure and enhancing operational efficiency through AI integration. Other companies in the tech sector, including Jack Dorsey's Block and Amazon, have also announced significant layoffs in response to AI-related restructuring plans. So far in 2026, over 12,000 job reductions in the U.S. have been attributed to AI-related decisions, according to the consulting firm Challenger Gray & Christmas. In its recent fourth-quarter earnings report, Meta disclosed plans for AI-related capital expenditures between $115 billion and $135 billion this year, nearly double the prior year’s spending, as part of its ambitious strategy to build a new AI division. Collectively, major tech firms, including Amazon, Alphabet, and Microsoft, are expected to invest around $700 billion in AI initiatives this year. Concerns have been raised among investors regarding the sustainability of such spending in relation to the revenue generated from AI. Zuckerberg emphasized that 2026 will be pivotal for AI, as the company concentrates on advancing its vision of "building personal super intelligence." Last year, Meta also made headlines by investing $14.3 billion in Scale AI and subsequently hiring its CEO and key engineers. Analysts from Jefferies noted that while other companies have experienced substantial layoffs attributed to AI, Meta’s potential workforce reduction signals a significant shift—indicating that AI is increasingly becoming a driver of productivity. They warned that these layoffs could reshape perceptions of the relationship between headcount, growth, and profit margins in the tech industry.