On October 28, 2025, Amazon announced it would lay off around 14,000 of its corporate workforce, potentially increasing to 10% of the total global corporate workforce or more than 30,000 employees in 2026.
In the announcement, senior vice president of the company’s HR team, Beth Galetti, emphasised the role of AI in changing company operations, stating, “This generation of AI is the most transformative technology we’ve seen since the internet, and it’s enabling companies to innovate much faster than ever before.” Some have taken this to mean that Amazon is replacing corporate workers with AI tools.
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However, the truth is not so straightforward. AI cannot directly replace Amazon’s corporate employees because it is not advanced enough yet to replace entire job roles. However, skyrocketing demand for AI solutions, combined with other factors like the tech hiring spree during the Covid-19 pandemic, contributed to Amazon’s decision to focus on maintaining financial health while increasing its AI spending.
Amazon overhiring during Covid
Accelerated demand for digital solutions, ecommerce, video streaming, and other online services during the Covid-19 pandemic sparked a hiring spree across the tech industry. At the time, Big Tech saw the increased use of digital services by businesses and consumers as the new normal. This led Amazon to invest heavily in its technology business, including Amazon Web Services (AWS), and grow its workforce significantly. In 2021, Amazon added more than 300,000 full- and part-time workers, taking its total headcount to 1.6 million people.
Based on the October 28 announcement, it is estimated that around 80% of the roles cut are in Amazon’s entertainment arm and in operations (HR, recruitment, advertising, marketing, and ecommerce functions) across other Amazon businesses. While these roles are heavily at risk of being automated by AI agents, there is no clear evidence that Amazon is replacing these roles with AI. In reality, Amazon is doubling down on its AI investments as a key corporate priority and needs to cut costs to maintain profitability. Beth Galetti’s statement highlighted the company’s desire to be “organised more leanly.”
The need for more GPUs
It should come as no surprise that Amazon is betting heavily on AI. According to Goldman Sachs, AI will drive a 165% increase in data center power demand by 2030. As the world’s largest public cloud provider, AWS is well-positioned to benefit from the growing demand for data center usage.
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By GlobalDataAWS is Amazon’s most profitable business unit, making up 58% or around $40bn of Amazon’s total operating income in 2024 despite contributing just 17% of net sales. Despite this, its profit does not cover anywhere near the amount of investment Amazon requires to fulfill AI data center demand. The company intends to spend as much as $118bn in capital expenditure in 2025 alone.
To keep up in the race for AI dominance, Amazon needs to increase investments in building data centers, develop graphics processing units (GPUs) with improved computing power, and buy GPUs when it cannot manufacture them fast enough. To do this, the company must keep borrowing capital, which requires strong financial health and a substantial cash flow.
Amazon’s executives and investors see corporate restructuring and the resulting layoffs as necessary to keep the company’s financial health in check. So, is AI the reason for Amazon’s latest layoffs? The answer is yes, but not in the way many have assumed.
It’s true that, in June 2025, Amazon CEO Andrew Jassy told employees that increased use of generative and agentic AI would lead to job cuts. “As we roll out more generative AI and agents, it should change the way our work is done,” Jassy said in a memo to staff. “We will need fewer people doing some of the jobs that are being done today”.
While AI can already automate some corporate tasks, it is not yet replacing human staff. However, the demand for AI solutions and cloud services to support AI development is directly responsible for the latest round of layoffs.
