What happens when one of the world’s largest tech companies pours tens of billions into artificial intelligence? For Meta Platforms, the answer might involve tough choices about its workforce.
Shares of Meta Platforms rose more than 3% on Monday, March 16th, to trade above $634. This is after a weekend report from Reuters suggested the social media giant may consider cutting over 20% of its employees as it ramps up spending on AI infrastructure.
But the company quickly pushed back.
Meta said the report referred to “speculative reporting about theoretical approaches” as per CNBC. Also, they did not confirm any plans to carry out layoffs. Still, analysts say the numbers behind such a move could be significant.
JPMorgan says layoffs could save billions
According to analysts at JPMorgan, a workforce reduction of around 20% could save Meta between $5 billion and $6 billion per year. The estimate assumes employee costs of roughly $300,000 to $400,000 per worker, including compensation and benefits.
Meta employed 78,865 workers as of December 31, 2025, as per data from Stock Analysis. Based on that figure, a 20% workforce reduction could affect roughly 15,773 employees. In 2025, the company’s headcount increased by 4,798 employees, representing 6.48% growth compared to the previous year.
Yet even those savings would only slightly offset the company’s massive spending plans.
Meta expects total expenses between $162 billion and $169 billion in the 2026 financial year. And this is largely driven by the race to build artificial intelligence infrastructure. That means even $6 billion in savings may barely move the needle.
Still, analysts say the impact could grow over time.
“If the cost reductions eventually flow into profits by 2027, they could add roughly $2 per share to earnings estimates, currently projected at around $31.50. JPMorgan said.
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AI spending is reshaping Meta’s strategy
The potential job cuts come as Meta dramatically increases its investment in artificial intelligence. In fact, lately, the company has fallen behind rivals like OpenAI, Anthropic, and Google in developing cutting-edge AI models.
Now it’s racing to catch up. Meta expects capital expenditures of up to $135 billion in 2026, nearly double the previous year’s spending.
The company recently announced it will spend up to $27 billion on cloud and computing services from Nebius to support its AI build-out.
Meta is also developing a new internal AI model reportedly called Avocado, though reports suggest it has not yet matched the capabilities of industry leaders.
Also, the AI jobs debate is heating up
The possibility of large layoffs tied to artificial intelligence is fueling a broader debate across the tech industry. Is AI replacing workers, or simply forcing companies to restructure?
Some executives are becoming increasingly direct about the shift. Jack Dorsey, chief executive of Block, recently said his company could cut nearly half its workforce as AI reshapes productivity. Others urge caution.
More Layoffs:
- Walgreens widens job cuts amid store closures
- UPS clears major legal hurdle amid job cuts
- Layoffs in January reach recession-era levels
Sam Altman, CEO of OpenAI, has suggested that some companies may be using AI as a justification for layoffs (AI washing) that might have happened anyway.
For an investor, the bigger question may be simpler. Will AI make tech companies more profitable? Well, some analysts believe the answer could be yes.
Brent Thill of Jefferies said the discussion around Meta highlights a larger shift across the sector.
Investors, he noted, are starting to rethink the relationship between headcount, productivity, and profitability in the AI era.
Meta also delivered strong quarter results
Meta Platforms continues to deliver strong financial results. This is even after debate around layoffs and artificial intelligence spending grows.
The company reported strong fourth-quarter and full-year 2025 results on Jan. 28, showing that its core advertising business remains a powerful cash generator even as spending on AI accelerates.
Founder and CEO Mark Zuckerberg struck an optimistic tone when discussing the results:
Zuckerberg said the company plans to push forward with efforts to build “personal superintelligence” in the coming years.
Key highlights from the quarterly results included;
- Total revenue: $59.9 billion, up 24% year-over-year
- Family of Apps revenue: $58.9 billion, up 25%
- Ad revenue: $58.1 billion, accounting for roughly 97% of total revenue
- Operating income: $24.7 billion with a 41% operating margin
- Net income: $22.8 billion, or $8.88 per share
What Meta expects next
Looking ahead, Meta expects continued growth. But also rising costs tied to artificial intelligence infrastructure.
CFO Susan Li had this to say in the earnings call commentary.
This is with foreign exchange expected to provide a 4% tailwind to year-over-year total revenue growth, based on current exchange rates.
However, spending is expected to climb sharply.
- 2026 total expenses: projected between $162 billion and $169 billion
- 2026 capital expenditures: expected between $115 billion and $135 billion
According to company leadership, most of the spending increase will go toward AI infrastructure, including data centers, cloud computing, and specialized hardware.
Employee compensation tied to hiring technical talent is expected to be the second-largest contributor to expense growth, as Meta expands its artificial intelligence capabilities.
Meta also expects operating losses in its Reality Labs division to remain similar to 2025 levels.
Related: Meta weighs drastic workforce decision after $135 billion guide
