AI Layoffs Already Have Surpassed Last Year’s Total. Tech Workers Are Being Cut First.

The artificial intelligence boom that’s pushing market caps to records is reshaping employment. Challenger, Gray & Christmas data highlighted on CNBC’s Closing Bell Overtime on June 4 indicates that more than 87,000 layoffs this year have been tied to AI, already eclipsing all of 2025’s full-year total just five months in. Chip leader NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) keeps minting AI fortunes, but the same trend is hollowing out white-collar tech roles.

This morning’s May jobs report seemed to push back on the gloom. Nonfarm payrolls rose 172,000, well above the 80,000 to 100,000 economists had penciled in, and the unemployment rate held at 4.3%. Hiring tied to the NVIDIA-led AI buildout helped lift total nonfarm payrolls to 159,001 thousand, a fresh record.

Beneath that headline, the composition of the cuts tells a sharper story. Tech accounted for nearly 40% of all job cuts in May, the highest monthly tech share since last August. Bellwethers including IBM (NYSE:IBM) and Qualcomm (NASDAQ:QCOM) face pressure on slowing cloud and chip guidance, with the Dow recently shedding more than 400 points on losses in IBM and Cisco Systems (NASDAQ:CSCO) shares.

Inside the Challenger Numbers

May’s announced layoffs jumped 16% versus April, the third straight monthly increase. Qualcomm shares moved down 10% on June 5 amid AI PC competition and flat earnings outlook, showing how the layoff narrative and the tape feed each other.

Weekly unemployment claims have ticked higher even as business-services openings stay firm. Initial claims reached 225,000 for the week ending May 30, up 35,000 over the prior month. IBM and other legacy software vendors trimming headcount fit the same softening picture.

“Anybody Who’s Coding for a Living Is Feeling It”

A guest on the segment summed up the labor stakes, stating that “anybody who’s coding for a living is feeling it for sure.” Engineers at NVIDIA partners and legacy code shops alike are watching coding copilots compress how many bodies a project needs.

The same guest urged caution on the raw count, noting, “It’s announced layoffs, right? Sometimes it just means general position eliminations, headcount reductions,” and that “Companies are pretty headcount aware at this point and they want to keep things pretty tight going into this summer.” Some firms tracking Qualcomm-style chip cycles may tag cuts as AI-driven for narrative purposes, so the figure is best treated as directional.

Even healthy operators are restructuring. Starbucks (NASDAQ:SBUX) is tying part of tech-team bonuses to AI usage and anticipates roughly $400 million in restructuring charges associated with the company’s “Back to Starbucks” push, a sign that AI-linked workforce optimization is spreading beyond pure-play tech.

A Two-Speed Labor Market

The host raised the economic stakes, noting these technology jobs are “higher-paid jobs, presumably. And the impact on the economy could actually be pretty significant.” Average hourly earnings ran at $37.53 in May, but tech salaries at IBM, NVIDIA, and similar firms sit well above that average. Each displaced engineer hits consumer spending harder than the headline number suggests.

Consumer sentiment already reflects that anxiety. The University of Michigan index sat at 49.8 in April, down from 61.7 last July and squarely in recessionary territory. Apple (NASDAQ:AAPL) is preparing to unveil its biggest AI push yet at the Worldwide Developers Conference (WWDC) on June 9, with Wedbush’s Dan Ives anticipating significant Siri-related announcements.

What Investors Can Watch From Here

The Challenger figure should be read as directional rather than precise. Announced cuts don’t always fully materialize, and AI attribution can be marketing as much as measurement, so investors tracking Apple, NVIDIA, and the broader hyperscaler complex shouldn’t extrapolate a recession from one report.

That said, the trend warrants consideration. Three straight monthly increases in announced layoffs, rising jobless claims, and a 40% tech share of cuts together suggest that the pain is concentrated in high-paid coding roles even while the overall payroll number from IBM-style enterprises holds up. Investors may want to right-size their exposure to companies leaning hardest on AI-driven cost cuts.

The takeaway is a bifurcated economy: the broad labor market looks resilient, but the engine rooms of Silicon Valley are running leaner. Watch for whether June’s Challenger report and the next initial-claims releases from companies like Qualcomm confirm or counteract the softening.