Meta Braces for Massive Layoffs: Up to 20% Workforce Cut to Fund Soaring AI Investments
By Tech News Desk
SAN FRANCISCO – Meta Platforms is preparing for its largest layoffs in company history, potentially slashing up to 20% of its workforce – around 16,000 jobs – as the tech giant grapples with skyrocketing costs from its aggressive push into artificial intelligence.
Three sources familiar with the matter told Reuters that senior executives have signaled the impending restructuring to other leaders, instructing them to plan workforce reductions. No firm timeline or exact scale has been set, but announcements could come as early as next month.[1][2][5]
The move comes amid Meta’s massive AI infrastructure spending. The company has projected capital expenditures of $115 billion to $135 billion for 2026 alone, nearly double the $72 billion spent in 2025. This surge has squeezed operating margins, which fell to 41% in Q4 2025 from 48% the prior year, driven by 40% expense growth.[3][7]
AI Ambitions Drive Cost Pressures
Meta CEO Mark Zuckerberg has ramped up the company’s generative AI efforts over the past year, aiming to compete fiercely in the space dominated by rivals like OpenAI and Google. To build a ‘superintelligence team,’ Meta has dangled compensation packages worth hundreds of millions of dollars over four years to poach top AI researchers, including former Scale AI CEO Alexandr Wang.[2][5][6]
The firm plans to invest approximately $600 billion in data centers by 2028 to power its AI operations. Recent acquisitions underscore this strategy: Earlier this week, Meta bought Moltbook, a social networking platform tailored for AI agents, and is spending at least $2 billion on Chinese AI startup Manus.[2][5]
Reality Labs, Meta’s division housing metaverse and AI projects, reported a staggering $6 billion loss last quarter, exemplifying the financial drag from these high-stakes bets.[3]
Setbacks in AI Model Development
Meta’s AI push has hit roadblocks. Last year, its Llama 4 large language models drew criticism for misleading benchmark results. The company scrapped the release of its largest variant, ‘Behemoth,’ originally slated for summer.[2][6]
The superintelligence team shifted to new models codenamed ‘Avocado’ and ‘Mango,’ but these have underperformed expectations, with releases delayed until May.[6]
Despite challenges, Zuckerberg highlighted early efficiency gains in January, noting that AI tools now allow single skilled individuals to handle projects once requiring large teams.[2]
Meta’s Response and Market Implications
A Meta spokesperson dismissed the reports as ‘speculative about theoretical approaches.’ The company recently cut over 1,500 jobs in Reality Labs and has a history of major reductions: 11,000 in November 2022 (13% of staff) and another 10,000 in early 2023.[4]
With nearly 79,000 employees, a 20% cut would eclipse prior efforts and signal broader Big Tech trends. Firms are trimming headcounts to finance AI booms, balancing innovation with Wall Street demands for profitability.[3][6]
Analysts view the layoffs as a direct counter to AI cost pressures. A reduction under 16,000 jobs might suggest Meta is underestimating expenses; anything larger could spark innovation concerns.[3]
Industry-Wide AI Cost Crunch
Meta’s plight mirrors peers. Tech giants across the sector are pouring billions into AI while optimizing workforces for AI-enhanced productivity. Zuckerberg’s vision of a leaner, AI-augmented staff aims to adapt, but risks short-term disruption.[2][6]
Investors will watch closely for the announcement, testing Meta’s ability to sustain growth amid unprecedented capex. The layoffs, if realized, would mark a pivotal shift, prioritizing AI dominance over sheer employee numbers.
This story is developing. Additional details may emerge as Meta finalizes plans.