Amazon cutting 14,000 corporate jobs to spend more on AI

virago testament skip nearly 14,000 collective jobs as the online retail giant ramps up spending on artificial intelligence while cutting costs elsewhere.

CEO Andy Jassy, who has aggressively sought to cut costs since becoming CEO in 2021, said in June that he anticipated 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 figure was a "small fraction" of what it plans to build.

Jassy encouraged employees to get on board with the company's AI plans. Earlier that month, Amazon announced it was planning to invest $10 billion US in building a campus in North Carolina to expand its cloud computing and AI infrastructure.

Since 2024 started, Amazon has committed to about $10 billion apiece to data centre projects in Mississippi, Indiana, Ohio and North Carolina as it ramps up its infrastructure to compete with other tech giants to meet growing demand for artificial intelligence products.

Amazon is competing in the AI space with giants like OpenAI, Google and Microsoft. 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," he said.

The online giant is reducing bureaucracy and "shifting resources," said Beth Galetti, senior vice president of people experience and technology at Amazon, in a message to employees on Tuesday.

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, Galetti said. For those who can't find a new role at the company or who opt not to look for one will be provided 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 suggest 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. Amazon has not said if more job cuts are coming.

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

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

Many retailers are pulling back on seasonal hiring this year due to uncertainty over the U.S. Economy and tariffs. Amazon 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 U.S. And overseas."

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.

But Saunders noted 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," he said.

"In some ways, this is a tipping point away from human capital to technological infrastructure."

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