• A 1%-3% cut by IBM would translate to the elimination of 2,700-8,100 positions.
• The company had flagged earlier that it used AI, specifically AI agents, to replace a couple of hundred human resources jobs. 
• IBM's stock is up about 40% year-to-date.

IT consulting services giant International Business Machines Corp. (IBM) is reportedly set to cut thousands of jobs in the fourth quarter, aligning with the trend seen in the tech industry as the macro and geopolitical environment remains challenging.

IBM stock, which fell 1.27% in Tuesday's regular trading amid the broader market sell-off, dropped 0.78% in the after-hours. The stock is up about 40% year-to-date.

IBM's Layoff Plans

IBM flagged a low single-digit percentage of job cuts in the fourth quarter, impacting its global workforce, a company spokesperson told CNBC.“While this may impact some U.S.-based roles, we anticipate that our U.S. employment will remain flat year over year.”

IBM likely hinted at what was to come when its CEO, Arvind Krishna, reportedly stated in early May that the company had used AI, specifically AI agents, to replace a couple of hundred human resources jobs. 

At the end of the fiscal year 2025, IBM employed 270,000 people. A 1%-3% cut would translate to the elimination of 2,700-8,100 positions. The Armonk, New York-based company reported robust quarterly results last month. CEO Krishna stated that the generative AI (GenAI) book of business totaled $9.5 billion, up 26% from $7.5 billion in the previous quarter. IBM also raised its fiscal year 2025 outlook. The CNBC report noted that IBM eliminated 200 marketing and communications jobs in March 2024. 

What Retail Feels About IBM Stock

Retail users of the Stocktwits platform remained 'bearish' on IBM stock as of late Tuesday, with the message volume on the stream at 'extremely low' levels.

A bearish watcher did not take kindly to the rumored job cuts.“Dump their shares after mass layoffs, and maybe they'll learn a lesson. Who are they creating all this optimized value for? Sub $250 coming soon,” they stated.

Techs Bring Axe Down Hard

According to Layoffs, about 218 tech companies have laid off about 112,732 employees this year. Amazon has recently confirmed that it is laying off 14,000 employees. 

Giving the rationale behind the move, Beth Galetti, SVP of People Experience & Technology at Amazon, said,“The reductions... are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we're investing in our biggest bets and what matters most to our customers' current and future needs.” CEO Andy Jassy hinted at a leaner workforce in mid-June as he elaborated on the virtues of GenAI. 

Microsoft announced multiple rounds of job cuts this year, including 6,000 positions in May, 305 permanent job cuts in early June, and an additional 9,000 jobs in early July. While CEO Satya Nadella expressed remorse, analysts saw it as a signal that the company is committed to profitable growth. Mega-cap peer and Google parent Alphabet also laid off hundreds of employees from its Platforms and Devices business. It followed up with a cut of a much smaller magnitude (around 200) in May. 

Social media giant Meta Platforms Inc. (META) cut 600 jobs in its Superintelligence Labs division last month, according to a New York Times report. The trimming came after Mark Zuckerberg went on a rapid hiring spree of key AI researchers and scientists following the unit's setup earlier this year. Sources reportedly told the publication that the job cuts were aimed at reducing organizational bloat following three years of rapid investment in AI. 

Why Techs Are Resorting to Job Cuts

While the efficiency mantra to tide over inflation-induced softness was the motive behind the massive layoffs the tech world announced in 2022, this time around, companies are looking to cut costs to meet their artificial intelligence (AI)-related spending. Goldman Sachs estimates that AI spending by the four hyperscalers - Microsoft, Amazon, Meta, and Alphabet - could reach $4 trillion by 2030, according to a Reuters report. Additionally, productivity gains from AI deployment have enabled companies to operate efficiently with a trimmed-down workforce.

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