Meta shares rise after report of potential 20% workforce reduction to manage AI spending
March 16, 2026 7:33 AM
IH Market News
Shares of Meta (NASDAQ:META) moved higher in premarket trading on Monday following a report that the company is weighing substantial job cuts as it increases investment in artificial intelligence infrastructure.
Reuters reported over the weekend, citing people familiar with the matter, that Meta is evaluating layoffs that could impact more than 20% of its workforce as it ramps up spending on AI-related projects. The company’s stock gained more than 3% in premarket trading by 05:18 ET.
According to the report, the plans are still under discussion and no final decision or timeline has been set. Senior executives have recently informed top managers about the possibility and asked them to begin identifying ways to streamline staffing as Meta attempts to balance the rising costs associated with AI infrastructure while improving efficiency through AI-assisted work.
If implemented at around the 20% level, the cuts would represent Meta’s largest round of layoffs since its restructuring in late 2022 and early 2023, which the company referred to as its “year of efficiency.” At the end of last year, Meta employed nearly 79,000 people.
The internal discussions come as CEO Mark Zuckerberg pushes to strengthen Meta’s position in the generative AI race. The company has reportedly been offering substantial compensation packages—some reaching hundreds of millions of dollars over four years—to attract leading AI researchers for a new superintelligence-focused team.
Meta has also outlined plans to invest about $600 billion in data center infrastructure by 2028 to support its AI strategy. The company has been expanding its AI initiatives through acquisitions and partnerships as well, including the purchase of Moltbook, a social networking platform designed for AI agents, and plans to spend at least $2 billion to acquire Chinese AI startup Manus, according to earlier Reuters reporting.
Analysts said the potential layoffs reflect the rising costs tied to the AI race while also highlighting the efficiency gains companies hope to achieve through automation and AI-powered development tools.
“We think the report underscores both the higher costs of AI infrastructure but also cost benefits to R&D heavy companies from coding and other efficiencies,” analyst Justin Post said in a note.
Post estimates that reducing Meta’s workforce by roughly one-fifth could generate annual savings of about $7 billion to $8 billion, based on average employee costs of roughly $500,000.
“Based on cost commentary in the article, we do not expect Meta to materially lower its FY26 expense guide of $162-$169bn, though we view the report as suggesting cost discipline at Meta vs outlook,” Post added.
JPMorgan analyst Doug Anmuth offered a similar assessment, estimating that a 20% reduction in headcount could lead to savings of approximately $5 billion to $6 billion, assuming per-employee costs of around $300,000 to $400,000.
However, he noted that these savings would represent only a modest offset relative to Meta’s rapidly expanding cost base as the company accelerates spending on AI infrastructure and related depreciation.
“But still, if the $6B were added to our 2027 profit and tax-affected, it would result in ~$2 in incremental GAAP EPS above our current $31.50 projection,” Anmuth continued.
Jefferies analyst Brent Thill said the “reported ~20% headcount reduction would reinforce that AI is beginning to deliver real productivity gains at scale, while helping offset a significant AI capex ramp.”
“The takeaway is not just better Meta margins, but a broader read- through for tech/software as investors reassess the link between headcount, growth, & profitability,” he added.
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Original: Meta shares rise after report of potential 20% workforce reduction to manage AI spending
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