AI Not Responsible for Recent Layoffs, Says Amazon CEO

Key Insights

• Sales Growth: Amazon reported $180.2 billion in sales, marking a 13% increase from last year.
• Job Cuts: Despite strong performance, Amazon announced the layoff of 14,000 corporate employees.
• AI Focus: CEO Andy Jassy indicated that the layoffs are not driven by AI but by a need for a leaner operational structure.
• Automation Goals: Amazon’s robotics team aims to automate 75% of its operations by 2027 to enhance efficiency.

Amazon just posted its third-quarter earnings and it turns out it was a phenomenal quarter for the e-commerce giant, despite recent layoffs.

The company giant raked in $180.2 billion in sales in the three months ending Sept. 30, up 13% from the same period last year. Its cloud business, AWS, reported its largest year-over-year growth since 2022, climbing 20% to billion. The company’s stock even popped 13% in after-hours trading following the report.

So why, with the company performing so well, did Amazon just slash 14,000 corporate jobs and hinted that more cuts could be on the way?

Fortunately for us, CEO Andy Jassy was asked to comment on the layoffs during the company’s earnings call Thursday evening. However, he was quick to downplay any connection to AI.

“What I would tell you is, you know, the announcement that we made a few days ago was not really financially driven, and it’s not even really AI driven, not right now at least,” Jassy told investors. “It’s culture.”

He went on to try to make the case that the company’s rapid growth over the last several years added more people, layers, and complexity to its operations. This quick growth, in turn, slowed decision-making and weakened ownership for workers at the frontlines.

Jassy said Amazon is now committed to operating like the world’s largest startup in order to move more quickly during what he called the major “technology transformation happening right now.”

The memo sent to laid-off employees earlier this week hit a lot of the same points Jassy made. But it also directly named the big tech shift, AI, that he had been hinting at, even as he claimed it wasn’t driving this round of layoffs.

“This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones). We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” wrote Beth Galetti, senior vice president of people experience and technology at Amazon, in the memo.

Still, these job cuts also come as Amazon, and the rest of Silicon Valley, is seemingly betting it all on AI.

Jassy said on Thursday that the company’s AI and cloud infrastructure added more than 3.8 gigawatts of power capacity in the past 12 months and is expected to add another gigawatt this fourth quarter.

And future cuts may not be limited to corporate workers. The New York Times reported last week that Amazon’s automation team expects that by 2027, the company could avoid hiring more than 160,000 U.S. workers it would normally need. Overall, Amazon’s robotics team has an ultimate goal to automate 75 percent of the company’s operations, according to internal documents obtained by The New York Times.