Meta Stock Rises on Reports of Major Workforce Cuts Planned

Meta's stock price climbed 3% Monday following reports the company may eliminate 20% or more of its employees as part of cost-cutting measures. The potential layoffs would help offset the social media giant's massive spending on artificial intelligence development and infrastructure.

Shares of Meta Platforms climbed 3% on Monday after reports emerged that the company is considering eliminating at least 20% of its workforce to help balance massive investments in artificial intelligence technology.

Should Meta proceed with cutting one-fifth of its staff, it would represent the company’s largest workforce reduction since its major restructuring in late 2022 and early 2023, which the company called its “year of efficiency” and resulted in approximately 21,000 job eliminations.

The social media company has been investing heavily to compete in the artificial intelligence sector after initially falling behind competitors, constructing data centers and competing aggressively for top talent. Meta anticipates spending as much as $135 billion by 2026, nearly twice what it invested last year.

These expenditures aim to secure the computing power necessary for training and operating AI systems, with Meta agreeing Monday to spend up to $27 billion on cloud services from Nebius.

Although the increased spending has enhanced Meta’s advertising tools and driven revenue growth, the company has not yet launched an AI system capable of competing with industry frontrunners OpenAI, Anthropic, and Google.

The company has been developing a new AI system called Avocado, though this model’s capabilities have not met internal expectations.

Rosenblatt Securities analyst Barton Crockett estimated that eliminating 20% of staff could save approximately $6 billion, potentially increasing adjusted core earnings by 5%.

“This doesn’t have to stop at 20%. There could be more down the road if AI is truly this impactful on staff productivity,” Crockett noted.

Meta employed 79,000 workers as of December’s end and responded to inquiries Friday by stating, “this is speculative reporting about theoretical approaches.”

The company’s shares were trading at $631.50 in premarket activity. The stock has dropped 7% year-to-date following a nearly 13% gain in 2025.

Artificial intelligence-related job cuts have been increasing worldwide, with companies announcing more than 61,000 AI-linked layoffs since November, including cuts at Amazon and Australia’s Wisetech.

Discussion about AI displacing human workers intensified after Block CEO Jack Dorsey announced plans last month to eliminate nearly half his company’s workforce, claiming the technology has transformed “what it means to build and run a company.”

Some industry observers suggest the layoffs also reflect excessive hiring during previous periods. OpenAI CEO Sam Altman commented last month that certain companies were using AI as justification for job cuts they would have implemented regardless.

“Is AI a convenient scapegoat for cuts that might have happened anyway? Perhaps. But we believe the market will quickly see through companies using AI as camouflage,” Bernstein analyst Mark Shmulik wrote in a research note.

Shmulik added that Meta was “probably the best placed incumbent to pivot to an AI-enabled organization,” citing the success of its post-pandemic organizational changes.