“AI layoffs” has become a common phrase among tech companies over the past two years. More and more companies are cutting back on staff, especially in the software sector, due to advances in AI. These reductions can result in the elimination of a significant portion of a company’s workforce in a single layoff.
AI attrition can occur for several reasons, or a combination of these reasons. The recent development of AI has created situations where human jobs are being replaced by AI, and where AI can perform the same tasks faster and at lower cost. Companies may also reduce human capital to free up resources for necessary investments in AI.
Advances in AI may threaten companies’ business models, forcing them to adapt and change in order to survive in the new world. This story has the scary name “SaaSpocalypse,” an apocalypse for SaaS companies that offer enterprise software as a subscription in the cloud.
Stocks in this sector have fallen tens of percent in recent months amid concerns in capital markets that AI could damage or even make redundant solutions offered by companies and SaaS business models as a whole.
Furthermore, it cannot be denied that companies that are aggressively reducing their workforce may find it convenient to blame AI for the reduction in workforce that they will probably carry out anyway.
Also available to Israelis
Of course, the AI layoffs have also affected Israeli software companies, causing havoc. The most recent example is monday.com (NASDAQ: MNDY), which announced on Wednesday that it was laying off 620 employees, or about 20% of its workforce.
At the end of 2025, Monday’s number of employees in Israel was 1,729, representing approximately 55% of its workforce. monday.com, which provides an AI-based platform for managing work tasks, trades on the Nasdaq with a market capitalization of $3.1 billion after its stock price fell about 75% last year.
The company, led by co-founders Roy Mann and Elan Zinman, has made what it calls its most significant change since its founding. monday.com explained that the change will transform the company from a work management platform to one that also uses integrated AI agents to do work, allowing humans and agents to work together. This change also introduced a new pricing model where customers purchase credits from Monday.com and use them to take advantage of the features we offer.
Meanwhile, the stock market remains unconvinced, with shares trading near their lows.
One person who has already experienced a crisis that led to AI layoffs is Wix founder and CEO Abishai Abrahami. He also serves on the board of monday.com and was one of its first investors.
Wix allows users to build and manage websites. Last year, as part of an understanding that the rise of AI required change, the company made a highly successful acquisition of Base44, the company behind Vibe coding. This allows users to create digital works using natural language without the need for code.
Base44 has been the driving force behind Wix’s growth, with annual recurring revenue (ARR) soaring from several million dollars to approximately $150 million annually. Investors weren’t convinced about Wix either, with the company’s stock falling 67% over the past year (although it has rebounded slightly from recent lows), with the main concern being that AI would negatively impact the company’s traditional activities, making them unnecessary.
“I’d happily say that in three years our team will be 1,000 Base44 employees, 1,000 Wix employees, and the rest will all be AI agents, but I’m not very confident that that’s possible. We all overestimate AI and its capabilities,” Abrahami recently told the US podcast 20VC.
Wickes has cut 20% of its workforce, or about 1,000 people, this year, a move it attributes to the need to become a leaner and faster company due to advances in AI and the strengthening of the shekel.
Downsizing at Fiverr
About a year ago, an Israeli company that made significant changes and cuts in response to advances in AI was Fiverr (NYSE: FVRR). Last September, the company, led by founder and CEO Misha Kaufman, announced it would lay off 250 employees, about a third of Fiverr’s workforce.
Kaufman explained at the time: “The speed of technology change and the possibilities it offers are astonishing, and we need new ways of thinking and more speed to stay ahead…We can and should dream bigger and build Fiverr faster as an AI-centric infrastructure.”
To achieve this objective, it was decided to make the company leaner, reduce its management hierarchy, and, according to Kaufman’s definition, “return to startup status.” Fiverr investors also seem to want to wait for more clarity on the situation, with the stock price down about 58% over the past year.
These Israeli examples are, of course, part of a broader picture. According to TechCrunch, 165,000 people were laid off worldwide in the first half of 2026 alone. For example, Oracle furloughed 13% of its workforce (21,000 people), and Microsoft announced 4,800 layoffs, but had already said last year that the layoffs of thousands of employees were due to the need to cut costs, adapt to rapid technological change and the large investments required in AI.
Software company Salesforce laid off 4,000 customer support employees last year, but its CEO said advances in AI meant fewer employees were needed.
rehire employees
About a month ago, software company Intuit laid off 3,000 employees, or 17% of its workforce, due to its business focus on AI-based products. But CEO Sasan Goodarji told CNBC: “This has nothing to do with AI. The goal is to be more efficient.” This could be part of a shift in the tone around AI downsizing. Recent articles are starting to question this move, such as a CNBC article that says companies are starting to reconsider focusing on AI at the expense of employees.
A Ford vice president said in the article that the company is rehiring engineers and said, “AI is a great tool, but it’s only as good as the information you train it on.” So, an IBM executive said, if they don’t hire new employees, “What will happen in three to five years? The well will run dry.”
Forbes also revealed that some companies are starting to rehire human employees. “The company first announced that it would use AI to perform tasks. The number of employees was reduced. Then, six to 12 months later, it was discovered that the AI was only able to successfully perform 60% of the tasks, and the company rehired the employees,” he said.
It’s hard to say that trends are changing, but skepticism appears to remain as companies cut staff and invest more in AI, and investors are waiting for further clarity, at least in the capital markets.
