As organizations race to adopt AI, some are investing in workforce development to complement the technology, while others are shifting resources to tech—and away from people. 

According to a recent study by outplacement and executive coaching firm Challenger, Gray & Christmas, AI is the leading cause of job cuts in 2026 and was cited in more than 120,000 dismissals in the first nine months of the year, representing about 21% of all layoffs. Those cuts have been concentrated largely in the technology sector, says Andy Challenger, the firm’s chief revenue officer.

“Because its products and investments are in building artificial intelligence itself, they’re just way more affected by investments in AI,” he says. “We may very well see jobs being replaced by artificial intelligence in all these other sectors as it becomes easier to use, and it can really be deployed in ways that replace people’s jobs.”

Challenger adds that for most employers, job cuts are a last resort. He contends that organizations will typically seek out other ways to trim their human capital budgets first, and that those smaller cuts could be an early signal of layoffs to come.

“When we see a cooling labor market—like we’ve been seeing the last couple years—we tend to see companies slow down hiring, raises, and benefits, and then finally get to layoffs,” he says. “That would be expected if companies are trying to cut costs to reinvest more capital into artificial intelligence.”

That’s the approach many non-tech industry employers appear to be taking as they seek to free up capital to invest in the technology: more money spent on AI, less on the humans who work for them.

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