‘AI-washing’ and ‘forever layoffs’: Why companies keep slashing jobs even as profits rise

Across numerous industries, AI is fulfilling its pledges of huge productivity improvements that could render human workers obsolete. Yet one fact stands out: This technology is deeply unsettling to employees. A survey conducted this summer revealed that 71% of workers fear AI will permanently displace too many people from their jobs. These anxieties align with corporate statements indicating plans to reduce staff as AI takes over various tasks.

However, the situation is somewhat more nuanced. While some companies are blaming AI for layoffs, the much-feared AI-driven job apocalypse hasn’t arrived just yet.

Out of the 1.2 million job cuts U.S. firms announced in 2025—almost double 2024’s figure—AI was cited as a cause for only 55,000 (4.5%) of those reductions. Moreover, in some instances, the link to AI could be overstated: Businesses might vaguely reference AI’s growth to excuse layoffs made for unrelated reasons, or downsize prematurely in hopes of AI-driven efficiency gains—practices often labeled AI-washing. Meanwhile, a recent analysis notes that the idea of AI upending the job market “remains largely speculative.”

In fact, some of the largest layoff rounds this year—1,700 roles at Dutch semiconductor firm ASML and 14,000 at Amazon—don’t seem to stem directly from AI automation. Instead, they’re tied to routine business practices like cutting corporate inefficiencies, even at companies with strong growth.

This offers little comfort to employees. The steady stream of layoffs at ever-more-profitable companies like ASML can erode morale among remaining staff and foster a growing belief that—whether AI is involved or not—no job is secure.

Boomtime layoffs

ASML is a clear beneficiary of the AI boom, producing lithography tools that etch minuscule circuit patterns onto silicon wafers and being the sole provider of state-of-the-art extreme ultraviolet (EUV) systems for the most advanced chips. Last year, its total net sales rose by 16% year-over-year, and gross profit increased by 19%.

Yet despite its robust, AI-driven earnings, ASML announced 1,700 job cuts in late January, stating: “As our FY 2025 financial results show, we’re making these adjustments during a period of strength.” Roger Dassen, ASML’s CFO, noted the layoffs would cut inefficiencies and eliminate unnecessary, redundant layers. “We want engineers to focus on engineering again,” he added.

Similarly, Amazon’s AI-related growth—its Q4 revenue exceeded analyst expectations, boosted by a 24% rise in sales for its AI-backing AWS division—hasn’t prevented job cuts. In late January, Amazon announced layoffs following previous restructuring efforts.

Amazon CEO Andy Jassy stated in June that the company planned to reduce its corporate workforce “as we achieve efficiency gains from widespread AI adoption across the business.” After the first round of layoffs, the company continued to focus on cost-cutting while investing heavily in expanding its AI data center infrastructure. During its earnings call, Amazon projected capital expenditures would exceed $200 billion this year—60% higher than last year and well above Wall Street’s forecasts. (Its stock price dropped initially in response.)

Chris Martin, lead researcher at Glassdoor’s economic team, notes these layoffs at healthy companies could be “a residual effect of the red-hot labor market a few years back, when talent competition was fierce.” “Companies in these scenarios often talk about streamlining operations, cutting bureaucratic layers, or trimming inefficiencies,” he explains. “They’re performing well but choosing to boost profits by reducing staff numbers.”

The toll layoffs take on workers

Naturally, this reasoning doesn’t ease workers’ anxiety, as it implies AI isn’t the only threat to their jobs. Business leaders considering payroll cuts should note this unease. Martin, referencing Glassdoor research, says layoffs at profitable companies can “catch employees off guard,” and the damage to morale is no different than layoffs at struggling firms.

The gradual, ongoing pattern of layoffs can also exhaust employees. Martin’s team identified a trend late last year: “forever layoffs,” or cuts that “arrive in endless waves rather than a single tsunami.” Amazon’s January downsizing, which came after an October restructuring, might feel to workers like “a constant stream of trims and dismissals,” Martin notes—hardly conducive to a positive workplace culture.

“This has a cumulative effect on employee engagement,” Martin adds. “Workers are hit by the first layoff, start to recover, then another wave hits—making it extremely difficult to bounce back.”

Beth Galetti, Amazon’s VP of People Experience and Technology, appeared to address worker concerns about repeated layoffs. “Some of you may wonder if this marks a new pattern—announcing large cuts every few months,” she said. “That’s not our intention.”

Whether Amazon employees will trust this message remains uncertain. Alongside the “forever layoff” trend, Glassdoor research identified the “great employee-leader divide”: As managers gain more leverage, workers have become “deeply skeptical of their leaders’ words and decisions.”

Clarification, Feb. 10, 2026: This article has been revised to clarify when Amazon CEO Andy Jassy made comments regarding the company’s layoffs.