AI Becomes Leading Reason for Layoffs in the US, Investors Suspect It's an Excuse

monday.com, a task-tracker developer, announced cutting 20% of its staff (about 630 people) citing a shift to a 'more compact and focused operating model' for an 'AI-based growth strategy' in its SEC filing. Despite strong financials—Q1 revenue up 24% to $351 million with a yearly forecast of 19-20% growth—the company became the 21st major tech firm to attribute layoffs to AI in 2026, according to TechCrunch. Challenger, Gray & Christmas data shows the share of AI-attributed layoffs in US announcements rose from 7% in January to 25% in March, 26% in April, and a record 40% (38,579 jobs) in May, dipping to 31% in June, making AI the top reason for four consecutive months. In the first half, 101,743 layoffs were blamed on AI, nearly double the entire 2025 figure. The tech sector is the epicenter, with US tech firms cutting nearly 140,000 jobs this year, about 50,000 from Amazon, Oracle, Microsoft, and Meta. Simultaneously, these companies are investing heavily in AI infrastructure, with Amazon, Alphabet, Meta, and Microsoft planning to spend around $725 billion on data centers this year. However, the five-fold surge in AI-attributed layoffs in four months is suspicious since AI capabilities haven't advanced that rapidly. Investors seem skeptical: stocks of companies citing AI for layoffs underperform the Nasdaq by nearly 10% in the following 30 trading days, versus 4% for other reasons. A CNBC review found 13 of 23 S&P 500 companies with AI-related layoffs traded lower after announcements, averaging a 25% decline for losers like Nike, Salesforce, and Fiverr. A Gartner survey of 350 executives indicates that AI-driven layoffs don't improve efficiency; better results come from augmenting employees rather than replacing them. Internal dynamics are complex: Meta laid off 8,000 but transferred 7,000 to AI-related roles, IBM triples junior hiring for AI, and Oracle's annual report vaguely says AI 'has led and may continue to lead to workforce reductions.' Jobs are being redistributed more than eliminated, but press releases simplify this to 'AI.' Challenger's data relies on employer self-reports, and Sam Altman in February called this 'AI washing,' with Scale AI's Jason Droge and Apollo's chief economist Thorsten Slok also suggesting CEOs use AI as a scapegoat. Real replacement exists, as Stanford's Digital Economy Lab shows weakening employment in AI-automatable professions, but distinguishing true replacement from excuses is impossible from public data. The market seems to punish companies not for using AI but for offering unverifiable explanations. The next Challenger report in early August will reveal whether the share of AI-attributed layoffs continues to decline as investors stop rewarding it.