Strange Times in Tech: The Dual Reality of Profits and Layoffs
Something strange is happening in tech right now. Companies are posting record profits and sales while simultaneously laying off tens of thousands of people. The official explanation they give is AI. According to TrueUp, a tech job board and recruiting platform that also runs one of the most widely cited tech layoff trackers, there have been an estimated 363 layoffs at tech companies so far this year, affecting nearly 150,000 people — a pace of about 974 people per day, 44% faster than last year.
The Rise in Tech Layoffs
The trend seems to be accelerating. Layoffs in the tech industry reached their highest single month in two years last month, with nearly 40,000 job cuts, and AI was the most cited reason for layoffs across all industries for the third month in a row, according to outplacement firm Challenger, Gray & Christmas.
AI: Culprit or Convenient Excuse?
However, there is growing skepticism that AI is really the culprit – that it is more of a convenient cover story than the root cause. Few examples illustrate the setback better than what happened at payments company Block earlier this year. After being criticized for laying off nearly half of the company earlier this year, Jack Dorsey denied that the cuts were a sign of problems, instead insisting that AI tools are “enabling a new way of working that fundamentally changes the meaning of building and running a business.” However, as Dorsey is raised by commentators
Other voices have also begun to speak out, including famed VC Marc Andreessen, who recently called AI a “panacea excuse” for layoffs that are actually about pandemic-era overstaffing. Speaking to podcaster investor Harry Stebbings, Andreessen said: “Basically every large company is overstaffed. It’s at least 25% overstaffed. I think most large companies are overstaffed by 50%. I think a lot of them are overstaffed by 75%. Now they all have the panacea excuse: Ah, it’s AI.”
Mixed Messages in the Corporate World
What happened at Uber earlier this month reflects the lack of clarity well. The company has cut about 23% of its workforce – HR and recruiting – affecting less than 1% of its 34,000 employees, it said. A company spokesperson said the cuts had nothing to do with AI. But the announcement came about a month after Uber’s CTO said the company had burned through its entire 2026 AI programming budget in four months and needed to limit individual engineers’ spending on tools like Cursor and Claude Code. Whatever Uber said publicly, people want to connect those dots.
What makes this explosive is that the moment tens of thousands of workers are thrown out the door, a small cohort of AI insiders become rich on a scale that is hard to imagine.
The Wealth Gap: AI’s Unintended Consequence?
Early last month, AI chipmaker Cerebras Systems closed its first day on the Nasdaq up 68% from its IPO price of $185, giving the chipmaker a market cap of around $67 billion – the largest U.S. tech IPO since Snowflake’s debut in 2020. By the end, co-founders Andrew Feldman and Sean Lie were billionaires. (The company’s shares have since fallen 30%.)
SpaceX, meanwhile, went public on Friday and, as of this writing, enjoys a market cap of $2.1 trillion, making Musk a trillionaire on paper and potentially creating an estimated 4,400 millionaires and around 400 centimillionaires – assuming the shares don’t fall.
Anthropic and OpenAI are also quickly entering the public market, both with valuations of around $1 trillion or more.
Then there is Mark Zuckerberg. In early March, he purchased a mansion in Miami’s “Billionaire Bunker” for $170 million, setting the record for the most expensive home sale in Miami-Dade County history. Two months later, Meta announced it would lay off 8,000 people, or about 10% of its workforce.
It’s not just Zuckerberg; Tech titans routinely spend eye-popping sums on their real estate portfolios. But these extremes come at a time when many Americans are under greater pressure than they have been in years.
The Broader Economic Picture
Consider that workers with employer-sponsored health insurance are facing premium increases of about 6 to 7% this year, more than double the rate of inflation, that the cost of private health insurance has roughly doubled since 2008, and that average home prices have risen 28% since the start of 2020 while mortgage rates have nearly doubled.
In a January 2026 New York Times/Siena poll, 65% of voters said a middle-class lifestyle was unattainable, and a more recent poll found that 76% of Americans now cite the cost of living as their top economic concern, a significant increase from 58% last year.
Lessons from History
In short, this is about more than just isolated job losses. Tens of thousands of laid-off tech workers are finding themselves in an unusually unforgiving cost environment, while at the same time tens of thousands of AI insiders are watching unprecedented paper wealth emerge and are being told that AI is the reason they’re out of work. Whether or not that is the real explanation – many economists instead point to tariffs, the war in the Middle East and general economic uncertainty as the real reasons for companies’ caution – the optics are what they are. One group becomes unimaginably rich from the advances that are supposed to replace the other.
It’s not hard to find a precedent for what happens when that gap gets big enough. In 2008, a financial crisis that began with loose lending and excessive risk-taking on Wall Street ended with bailouts for the banks that caused it, while millions of Americans lost jobs and homes in the Great Recession that followed. Three years later, that anger crystallized in “Occupy Wall Street.”
This move might look strange in comparison if the current price continues. Occupy Wall Street was emerging from a crisis, and the core public anger was about who was paying for the cleanup. This time there is no crash to point to. Companies are profitable, AI itself is creating a new class of wealth overnight, and layoffs are still happening, with AI cited as a driving force. If the optics of 2008 were, “We’re bailing out the people who ruined the economy while you lose your jobs,” the optics here might end up being, “We’re getting richer than ever thanks to the very technology we use to replace you.”
Many companies – including Block, Atlassian and Cloudflare – have seen their stocks skyrocket as they cited AI as a reason for the cuts, so the strategy makes sense on its face. Still, they might want to think about whether that’s really the message they want to send to the people they’re firing and to everyone else watching now.
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