Job cuts come despite strong profits and rising AI investment
Amazon is laying off tens of thousands of employees even as it posts strong financial results and ramps up artificial intelligence investments. The company made over $35 billion in profit in the first half of 2025 and is expected to spend more than $120 billion on AI this year. Despite this, it announced 14,000 job cuts on Tuesday, with more potentially on the way.
Amazon says the move is part of a broader strategy to operate with greater agility and efficiency, aiming to behave “like the world’s largest startup.” However, the timing raises questions about how much of this downsizing is being driven by AI expectations versus broader economic pressures.
Industry-wide trend driven by economic uncertainty
Amazon isn’t alone. UPS has cut 48,000 jobs this year, and Target eliminated 1,800 corporate roles just last week. Major tech players such as Microsoft and Meta have also trimmed staff recently, despite strong earnings. Many of these cuts are being justified as preparations for an AI-enabled future, though the real impact of AI on workforce efficiency remains largely speculative.
Boston College business analytics professor Sam Ransbotham warned that expectations around AI may be outpacing reality. “Not everything we’re expecting will pan out,” he said. While Amazon has acknowledged the potential of AI “agents” replacing some tasks, the company maintains that the current layoffs are not primarily due to AI.
Layoffs bring long-term risks and reputational concerns
Experts caution that the push for early staff reductions based on AI potential could backfire. Jessica Kriegel of Culture Partners said many companies are conducting “preemptive layoffs” to create financial flexibility for AI investments, even though the technology is not yet ready to replace most human roles.
Some fear this approach may lead to long-term vulnerability. “Slimming down too early doesn’t make a company nimble; it makes it brittle,” said Kriegel. Companies risk losing critical human expertise before AI tools are fully capable of delivering on their promises.
AI hype vs. real-world productivity
While AI tools like ChatGPT have become widespread, their productivity gains remain limited. Chatbots are increasingly used in customer service and coding support, but their outputs can be flawed and lack the nuance of human-generated work. Instances of so-called “workslop”—AI-generated content that appears useful but lacks substance—have become more common.
According to a study by Indeed, job postings referencing “AI” have increased, but nearly 25% lack details on how the technology will be used. This trend, known as AI-washing, reflects broader skepticism about whether AI adoption is driving real value or simply being used to justify corporate decisions.
Looking ahead
Amazon has not disclosed which departments will be impacted by the cuts. The company’s stock rose slightly on Tuesday, a sign that investors are initially supportive of the cost-cutting measures. However, analysts suggest that long-term success will depend not on how quickly companies automate, but on how well they adapt to the evolving AI landscape.
Amazon is set to report its next quarterly earnings on Thursday, which may offer further insight into how the company balances workforce changes with its aggressive AI strategy.
