Shares of Meta Platforms rose more than 3% on Monday after a Reuters report that the social media giant may consider cutting more than 20% of its workforce as it ramps up spending on artificial intelligence infrastructure.
The company, however, dismissed the claims, saying the reports were speculative and not reflective of confirmed plans.
According to the report by Reuters published over the weekend, senior executives at Meta had asked leaders across the organization to start preparing for possible headcount reductions.
The report cited three anonymous sources familiar with the discussions.
No date has been set for the cuts and the magnitude has not been finalized, the people said.
However, Meta responded to the report saying the claims referred to “speculative reporting about theoretical approaches” and did not confirm that such layoffs were under consideration.
Potentially the largest layoffs since 2022
If Meta were to cut around 20% of its workforce, the move would represent the company’s largest round of layoffs since the restructuring effort led by chief executive Mark Zuckerberg during what he called the “year of efficiency” in 2022 and early 2023.
During that period, the company eliminated roughly 21,000 jobs as part of a sweeping cost-cutting effort aimed at streamlining operations following rapid expansion during the pandemic.
This included cutting 11,000 jobs in 2022, and slowing hiring to rein in costs.
However, despite the earlier layoffs, Meta’s workforce has gradually grown again, rising 6% in 2025 to reach nearly 79,000 employees by the end of December, 2025.
A reduction of 20% would affect more than 15,000 workers.
AI spending intensifies cost pressures
The potential job cuts come as Meta accelerates spending to build infrastructure needed for artificial intelligence.
After falling behind rivals in the race to develop advanced AI models, the company has dramatically increased investments in data centers, computing capacity and specialized talent.
Meta expects capital expenditures of as much as $135 billion in 2026, roughly double the level seen last year.
Much of the spending is aimed at securing the computing power needed to train and operate large AI models.
The company said Monday it would spend up to $27 billion on cloud and computing services from Nebius as part of a new agreement.
While those investments have helped improve Meta’s advertising tools and contributed to stronger revenue growth, the company has yet to release an AI model capable of competing with offerings from leaders such as OpenAI, Anthropic and Google.
Meta has been developing a new model known internally as Avocado, though its performance has reportedly fallen short of expectations.
Analysts weigh cost savings
Analysts say potential layoffs could generate meaningful cost savings, though they would represent only a small portion of Meta’s overall expense base.
According to analysts at JP Morgan, a 20% workforce reduction could save between $5 billion and $6 billion annually, assuming costs of $300,000 to $400,000 per employee.
However, those savings would make only a modest dent in Meta’s projected expense base of between $162 billion and $169 billion this year, which has expanded significantly because of AI-related investments, the analysts said.
With Meta’s total expenses nearly twice what they were in 2022 given the heavy AI spending, $6 billion in savings “doesn’t make as big of a dent”, they said.
If the savings were reflected in profits by 2027, they could add roughly $2 per share to earnings estimates currently projected at $31.50, they said.
Analysts at Rosenblatt Securities also estimate that a 20% reduction in staff could translate into about $6 billion in cost savings, potentially boosting adjusted core earnings by around 5%.
“This doesn’t have to stop at 20%. There could be more down the road if AI is truly this impactful on staff productivity,” they said.
Debate over AI and jobs intensifies
The broader debate about whether artificial intelligence will replace human workers has intensified across the technology sector.
Last month, Jack Dorsey, chief executive of Block, said his company planned to cut nearly half its staff, arguing that advances in AI were reshaping how businesses operate.
Other industry leaders have been more cautious in attributing layoffs directly to AI.
Sam Altman, chief executive of OpenAI, recently suggested that some companies might be using AI as a justification for job cuts that would have happened regardless.
Analysts at Bernstein said investors would likely scrutinize companies closely if they cite artificial intelligence as the main reason for workforce reductions.
Still, they noted that that Meta was “probably the best placed incumbent to pivot to an AI-enabled organization”, pointing to the success of its post-pandemic restructuring.
Jefferies’ analyst Brent Thill said that the report reinforced the narrative that artificial intelligence is improving productivity across the tech sector.
“The takeaway is not just better Meta margins, but a broader read-through for tech/software as investors reassess the link between headcount, growth and profitability,” Thill said.
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