Amazon cutting 14,000 corporate jobs as spending on AI accelerates

Amazon will cut about 14,000 corporate jobs as the online retail giant ramps up spending on artificial intelligence while cutting costs elsewhere.

In June, CEO Andy Jassy, who has aggressively sought to cut costs since becoming CEO in 2021, said that he anticipated that generative AI would reduce Amazon’s corporate workforce in the next few years.

Jassy said at the time that Amazon had more than 1,000 generative AI services and applications in progress or built but that that figure was a “small fraction” of what it plans to build.

Jassy encouraged employees to get on board with the company’s AI plans after it announced plans to invest US$10 billion building a campus in North Carolina to expand its cloud computing and artificial intelligence infrastructure.

Since 2024 started, Amazon has committed to about US$10 billion apiece to data centre projects in Mississippi, Indiana, Ohio, and North Carolina as it builds up its infrastructure to try to keep up with other tech giants making leaps in AI. Amazon is competing with OpenAI, Google, Microsoft, Meta, and others. In a conference call with industry analysts in May, Jassy said the potential for growth in the company’s AWS business is massive.

“If you believe your mission is to make customers’ lives easier and better every day, and you believe that every customer experience will be reinvented with AI, you’re going to invest very aggressively in AI, and that’s what we’re doing. You can see that in the 1,000-plus AI applications we’re building across Amazon. You can see that with our next generation of Alexa, named Alexa+,” he said.

Teams and individuals impacted by the job cuts will be notified on Tuesday. Most workers will be given 90 days to look for a new position internally, Beth Galetti, senior vice- president of People Experience and Technology at Amazon, wrote in a letter to employees on Tuesday. Those who can’t find a new role at the company or who opt not to look for one will be provided with transitional support, including severance pay, outplacement services, and health insurance benefits.

Amazon has about 350,000 corporate employees and a total workforce of approximately 1.56 million. The cuts announced Tuesday amount to about a four per cent reduction in its corporate workforce.

Amazon’s workforce doubled during the pandemic as millions stayed home and boosted online spending. In the following years, big tech and retail companies cut thousands of jobs to bring spending back in line.

The cuts announced Tuesday suggests that Amazon is still trying to get the size of its workforce right, and it may not be over. It was the biggest culling at Amazon since 2023, when the company cut 27,000 jobs. Those cuts came in waves, with 9,000 jobs trimmed in March of that year and another 18,000 employees two months later. Amazon has not said if more job cuts are on the way.

Yet the jobs market, which has for years, been a pillar in the United States economy, is showing signs of weakening. Layoffs have been limited, but the same can be said for hiring.

Government-hiring data is on hold during the government shutdown, but earlier this month, a survey by payroll company ADP showed a surprising loss of 32,000 job losses in the private sector in September.

Many retailers are pulling back on seasonal hiring this year due to uncertainty over the US economy and tariffs. Amazon Inc said this month, however, that it would hire 250,000 seasonal workers, the same as last year’s holiday season.

Neil Saunders, managing director of GlobalData, said in a statement that the layoffs “represent a deep cleaning of Amazon’s corporate workforce”.

“Unlike the Target layoffs, Amazon is operating from a position of strength,” he said. “The company has been producing good growth, and it still has a lot of headroom for further expansion in both the US and overseas.”

But Saunders noted that Amazon is not immune to outside factors as global markets tighten and underlying costs climb.

“It needs to act if it wants to continue with a good bottom-line performance. This is especially so given the amount of investment the company is making in areas like logistics and AI. In some ways, this is a tipping point away from human capital to technological infrastructure,” he said.

Amazon will post quarterly financial results on Thursday. During its most recent quarter, the company reported 17.5 per cent growth for its cloud computing arm Amazon Web Services.

AP