170,000 People: This Round of Layoffs in Silicon Valley Exceeds Those During the “COVID-19 Pandemic”
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170,000 People: This Round of Layoffs in Silicon Valley Exceeds Those During the “COVID-19 Pandemic”
Not a normal fluctuation in the economic cycle, but an irreversible industrial restructuring.
Navigating Web3 tides with focused insightsAuthor｜Hualin Wuwang
Editor｜Jingyu
U.S. employment data for February 2026 has been released—and one figure left economists momentarily speechless: the rate of job losses in the tech sector is now outpacing both the 2008 financial crisis and the pandemic-related downturn of 2020.
These two moments represented the most severe economic shocks the U.S. experienced over the past two decades.
Today, the tech industry is eclipsing both—using sheer numbers of layoffs to leave them in the dust.
The question is: In 2008, banks collapsed; in 2020, lockdowns froze the economy. So what collapsed in 2026?
01 The bubble burst—but not a valuation bubble
Let’s rewind to 2020–2022. Pandemic-driven digital demand surged, while the Federal Reserve kept interest rates near zero—flooding the market with cheap capital. Tech companies suddenly felt like they’d struck gold, expanding aggressively. Some top-tier firms doubled—or even more than doubled—their headcount within just two or three years.
The logic then was simple: growth was the sole KPI; burning cash was the only path forward; headcount was the only execution tool.
Then interest rates rose. The foundation of the growth logic cracked. Valuations began retreating. Investors grew cautious. Layoffs quietly began at the end of 2022. At the time, most people still viewed this as “adjustment”—a temporary correction that would reverse once markets recovered.
But it never reversed.
In 2025 alone, the global tech industry cut approximately 245,000 jobs. U.S. companies accounted for nearly 70% of those cuts—over 170,000 positions.
Entering 2026, the pace hasn’t slowed—it’s accelerated. In just the first six weeks, over 30,000 employees were laid off, and more than 80% of those cuts came from U.S. firms.
After reporting record revenue of $71.69 billion in 2025, Amazon announced plans to eliminate 16,000 corporate roles in 2026—more than half of all publicly announced tech layoffs.
Block CEO Jack Dorsey wrote in his shareholder letter: “Smaller teams using the tools we’re building can do more—and do it better.” Autodesk and Salesforce each cut around 1,000 jobs early this year.
Note this detail: Most of these companies remain profitable—and some have even set new revenue records.
This isn’t survival-driven layoff. It’s a deliberate, strategic choice.
02 Is AI the scapegoat?
Every major wave of layoffs needs a narrative to explain it.
This time, AI is the most convenient one.
“Layoffs due to AI displacement”—this framing sounds both technologically sophisticated and era-appropriate, almost indisputable. Yet the data tells a different story.
According to RationalFX’s analysis, of the roughly 245,000 global tech layoffs, only about 69,800 (roughly 28.5%) can be directly attributed to AI and automation adoption.
That means over 70% of layoffs stem from other causes.
IBM CEO Arvind Krishna addressed this head-on: “From 2020 to 2023, some companies increased headcount by 30% to 100%. This is simply a necessary correction.” He didn’t blame AI—instead pointing to a more fundamental truth: an economic hangover following excessive hiring.
Of course, AI isn’t entirely innocent. Its role is just subtler than “direct replacement”: AI has made companies realize many roles simply don’t need to exist. It doesn’t fire individuals—it forces management to recalculate, and discover the math no longer adds up.
This logic is harsher—and far harder to refute. You can hardly argue “AI can’t do my job” when it already does.
Analysts have coined a term for this round of layoffs: “structural reset,” rather than “short-term cost correction.” The distinction matters: the latter implies you’ll be rehired when conditions improve; the former means your position is gone for good.
This is the most critical factor in understanding today’s tech winter.
Past large-scale layoffs were essentially temporary demand-side contractions. Companies waited for economic recovery—and once growth returned, those same roles reopened. This time, however, many eliminated positions are being permanently redesigned—around AI-first workflows, enterprises are rebuilding their organizational structures from the ground up.
Daniele Grassi, CEO of General Assembly, issued a sober warning: While companies slash headcount, they’re simultaneously ramping up AI investment—creating a skills gap that will ultimately slow down transformation itself.
In other words, layoffs themselves are generating new risks.
Market data shows a striking bifurcation in the tech sector: demand for AI-related roles is surging, while traditional generalist tech roles are shrinking. “Tech is both growing and contracting”—and both are happening simultaneously, just affecting different people.
If you’re an AI engineer with expertise in prompt engineering and optimizing LLM inference costs, 2026 may be the best job market you’ve seen in years.
If you’re a generalist product operator, mid-platform engineer, or traditional sales professional, you’re likely facing a rapidly narrowing market.
This isn’t an industry-wide decline—it’s a rapid redefinition of who counts as “valuable.”
03 How cold will this winter get?
Adam Slater, Chief Economist at Oxford Economics, delivered a sobering assessment: if the tech sector’s downturn continues, U.S. GDP growth in 2026 could fall to just 0.8%, hovering on the edge of “near recession.”
Excluding tech investment, the U.S. saw virtually no growth in the first half of 2025.
America’s dependence on tech has become so deep that a tremor in the sector reverberates across the entire economy.
Yet there’s another perspective. Industry observers at Salesforce note that compared to 2024, total absolute layoffs across 2025 actually declined by roughly 20%. The narrative of “2025 as a disaster year” doesn’t fully hold up under scrutiny.
This layoff wave looks less like a sharp downturn with a clear bottom—and more like an open-ended transition period.
Companies are using layoffs to “clear space”—space for AI tools, leaner teams, and higher human productivity per employee. This logic will persist until some boundary is reached—perhaps regulation, perhaps a technological bottleneck, perhaps a consumer response.
Jack Dorsey’s phrase—“smaller teams, doing more”—captures the industry’s collective mindset today. But here’s the question: When everyone shrinks, who builds the next “larger” thing?
What the tech industry is undergoing isn’t just a routine cyclical trough—it’s a fundamental reckoning over “what role humans play within systems.”
Unfortunately, layoff figures offer no answer to that question.
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