AI may not yet be a complete disaster for jobs, but companies are citing it more than any other reason when announcing layoffs, according to a new report from Challenger, Gray & Christmas.
AI accounted for 40% of the 97,006 layoffs by U.S.-based employers in May, the highest monthly total since Challenger began tracking AI as a reason for layoffs in 2023, according to the global outplacement firm’s latest report. By 2026, AI will result in 87,714 layoffs, far exceeding the total of 54,836 in 2025, Challenger said.
“AI is not yet the apocalypse for jobs that some predicted,” Andy Challenger, labor and workplace expert and chief revenue officer at Challenger, Gray & Christmas, said in a statement accompanying the report. “Like spreadsheets and email before it, this technology will ultimately improve employee productivity, but our data shows that companies are already working on it, citing AI for the savings more than any other reason.”
Overall, Challenger found that May 2026 saw the highest number of layoffs since 2020, when 397,016 layoffs were announced at the height of the global COVID-19 pandemic. The report said technology remains the leading sector for job cuts by a “wide margin”.
The extent to which AI is to blame for layoffs is understandably hotly debated among executives at companies directly involved in the AI boom. Sam Altman, CEO of OpenAI, recently said that companies are “AI-washing” layoffs, blaming decisions on early-stage technology when other business factors are at play.
And Thorsten Slok, chief economist at Apollo Global Management, said last week that there is “zero evidence of job losses due to AI,” citing the ADP National Employment Report.
Outside of AI, the second biggest reason for layoffs so far this year has been “market and economic conditions,” with 69,645 layoffs, according to Challenger’s report. “Closing” is cited as a 66,733 cut. There are 52,249 cases of “restructuring.”