‘AI-washing’ and ‘forever layoffs’: Why companies keep cutting jobs, even amid rising profits

In many industries, AI is far from delivering on its promises of massive productivity gains that make humans obsolete. But one thing is clear: The technology is absolutely terrifying workers. A survey of nearly 5,000 Americans this summer found that 71% of them are worried that artificial intelligence will put too many people out of work permanently. Those concerns reflect what companies are saying: About 40% of employers expect to cut their workforces in response to AI automating tasks. 

But the reality is a bit more complicated. Companies are citing AI in some layoffs, but the looming AI jobspocalypse doesn’t seem to be here yet. 

Of the 1.2 million job cuts U.S. companies announced in 2025—yes, nearly twice 2024’s total—AI was mentioned as a reason for just 55,000, or 4.5%, of them, according to research firm Challenger, Gray & Christmas. And in some cases the connection to AI might be exaggerated: Companies may make vague gestures toward the rise of AI as a way to justify layoffs undertaken for other reasons, or do layoffs in premature anticipation of AI efficiency gains—practices that market research firm Forrester recently dubbed “AI-washing.” Meanwhile, a new report from the Yale Budget Lab suggests that the notion of AI roiling the job market “remains largely speculative.” 

And indeed, some of the biggest rounds of layoffs so far this year—1,700 at Dutch semiconductor supplier ASML and 14,000 at Amazon—do not appear to be due directly to AI automation, but rather boring business basics like trimming corporate bloat, at companies reporting healthy growth.

That’s not particularly reassuring to workers. The drip, drip, drip of layoffs at increasingly profitable companies like ASML and Amazon can ruin morale among remaining workers and contribute to a growing sense that—because of AI or not—no one’s job is safe. 

Boomtime layoffs

ASML is a standout winner from the AI race, as the maker of the lithography equipment that prints tiny circuit patterns on silicon wafers and the only company to provide the cutting-edge extreme ultraviolet or EUV systems used for the most advanced chips. Last year it saw a 16% jump in total net sales from the year prior, as well as a 19% increase in gross profit.

But despite its booming, AI-fueled earnings, ASML announced 1,700 job cuts in late January, explaining: “As our FY 2025 financial results demonstrate, we are choosing to make these changes at a moment of strength.” ASML chief financial officer Roger Dassen said the layoffs would trim bloat and reduce extraneous and inefficient layers. “We want to make sure engineers can be engineers again,” he told reporters. 

At the same time, Amazon’s lift from AI—its fourth-quarter revenue beat analyst forecasts, buoyed by 24% revenue growth in its AI-supporting AWS unit—has not been enough to save jobs from the chopping block. In late January, Amazon announced it was cutting 16,000 positions after announcing 14,000 job cuts in October. 

CEO Andy Jassy in June issued a company-wide memo that said Amazon expected to reduce its total corporate workforce “as we get efficiency gains from using AI extensively across the company.” Later, after Amazon laid off its first round of workers, he said the cuts were driven by “culture” and “a lot more layers” due to years of rapid growth. Amazon is looking to cut costs wherever it can as it pours money into its frantic AI data center infrastructure build-out. During its earnings call, the company said it expects its capital expenditures to top $200 billion this year, up 60% from last year and far above Wall Street expectations. (Its shares initially sank as a result.)

These layoffs at generally healthy companies may be “a little bit of a hangover effect from what was a really hot labor market a few years ago, when there was intense competition for talent,” says Chris Martin, lead researcher on Glassdoor’s economic research team. “So you’ll hear companies in these cases say they want to streamline, or remove layers of bureaucracy or management, or trim bloat. It’s companies that are doing well, but they’re deciding to boost profitability by removing some headcount.”

The toll layoffs take on workers

Of course, that rationale won’t alleviate workers’ sense of unease because it suggests that AI isn’t the only job killer they need to worry about. And that unease is worth keeping in mind for business leaders considering trimming the payroll. Layoffs at companies with robust bottom lines can “blindside” employees, and the harm done to worker morale is indistinguishable from the effect of layoffs at a struggling company, Martin says, citing Glassdoor research. 

That “drip, drip, drip” approach to layoffs can also wear down workers. Martin and his team flagged a trend at the end of last year: the “forever layoff” or layoffs that “come in never ending waves instead of a tsunami.” Amazon’s January downsizing, which followed an October restructuring, could feel to workers like “a continual drumbeat of trimming and dismissals,” Martin says—hardly a recipe for a cheerful company culture. 

“It has a compounding impact on engagement,” he says, “because you get knocked down by the first layoff and just as you’re getting back up again, there’s another wave, and it’s really hard for employees to recover from that.” 

Beth Galetti, Amazon’s vice president of people experience and technology, seemed to anticipate worker worries about the successive waves of layoffs. “Some of you might ask if this is the beginning of a new rhythm—where we announce broad reductions every few months,” she wrote in a blog post. “That’s not our plan.”

It’s an open question of whether Amazon employees will buy that message. In identifying the “forever layoff” trend, Glassdoor research also spotted another one, called “the great employee-leader divide”: Bosses’ growing leverage has made workers “highly skeptical of what their leaders say and the decisions they make.”

Clarification, Feb. 10, 2026: This article has been updated to clarify the comments of Amazon CEO Andy Jassy following the company’s layoffs.

This story was originally featured on Fortune.com