Tech companies are firing everyone to "fund AI", spending money on each other

So, Amazon announced they're laying off 30k people. This is set to be the largest layoff in the company’s history. That's on top of Microsoft cutting 15k, Meta cutting 3.6k and Google cutting hundreds this year. Over 180,000 tech workers laid off in 2025 alone.

But here's what nobody's connecting and it's actually insane when you connect all the dots. These same companies are spending over $300 billion on AI this year. So they're firing people to "free up capital for AI investments." Then spending that money buying stuff from each other. And none of it's making them money yet.

Let me break down what's actually happening:

Layoff is just an excuse - Every company's using the same line. "We're restructuring for AI." "AI will handle these tasks now." "We need to fund AI initiatives."

Zuckerberg said AI could be ready this year to "effectively be a sort of mid-level engineer capable of writing code.", Amazon CEO Andy Jassy said "we will need fewer people doing some of the jobs that are being done today.", Salesforce laid off 4,000 customer support staff and their CEO literally said it was because of "increasing AI adoption.", IBM cut 8,000 jobs in HR because "AI tools take over routine administrative tasks."

So the story is AI's now capable of doing these jobs right? That's why they gotta fire everyone. Except the thing is - They're not saving that money. They're spending way more than they're saving.

and where the money is really going? They're buying from each other -

• Microsoft buys Nvidia chips. Rents cloud capacity from Amazon AWS. Buys software from other companies.
• Amazon buys Nvidia chips. Uses Microsoft software. Rents capacity they can't build fast enough.
• Meta buys Nvidia chips. Rents infrastructure from Google Cloud and AWS
• Apple doesn't even build AI infrastructure. They rent everything from Google AWS and Azure. So Apple pays Google. Google pays Nvidia. Nvidia pays TSMC for manufacturing. Microsoft pays Amazon. Amazon pays Microsoft. Meta pays everyone.

They're literally just passing money in circles. The "Magnificent 7" stocks/companies Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla, have a combined market cap of $17 trillion. For reference US GDP is $30 trillion. But their combined revenue in 2024? $2.2 trillion. Net profit? around $550 billion.

They're trading at an average P/E ratio of 35. That means investors are paying $35 for every $1 of profit. The S&P 500 without them? P/E of 15.5. Why the premium? Because everyone believes AI is going to make them wildly profitable in the future.

But right now they're just spending money. On each other. Creating the illusion of growth.

But here's the trap. These companies CAN'T stop now. Because if any of them stops their stock crashes. Investors think they're giving up on AI and falling behind. So they're locked in an arms race. Have to keep spending to maintain stock prices even if the spending doesn't generate returns.

Microsoft, Amazon, Alphabet Meta increased capex by 42% in 2024. Planning another 17% increase in 2025. $244 billion total spend next year across just those 4.

and it's going to Mostly Nvidia. Who uses it to buy manufacturing from TSMC. Who uses it to buy equipment from ASML. Money moving in circles.

Connecting the dots

So let me spell this out. These companies are:

1. Laying off hundreds of thousands of workers to "fund AI"
2. Spending way more on AI than they're saving from layoffs
3. Buying most of that AI infrastructure from each other
4. Not making any actual profit from AI yet
5. Can't stop spending or their stocks crash
6. Creating the illusion of economic growth through spending alone

So when you hear "stock market hit a new record" that means these 7 companies went up. The other 493? They contributed 46%. And why did these 7 go up? Because they're spending hundreds of billions on AI. Which inflates their valuations. Which makes the S&P go up. Which makes everyone think the economy's great. Your 401k? Probably heavy in S&P 500 index funds. Which means 37% of your retirement is bet on these 7 companies and their AI spending paying off eventually.

And we're all just along for the ride.

TLDR

Amazon laid off 30,000 people yesterday. Microsoft 15,000 this year. Meta 3,600. Intel 22,000. Over 180,000 tech workers fired in 2025. All saying it's to "fund AI initiatives." But they're spending $300B+ on AI way more than they're saving from layoffs. Most of that money going to each other in circles. Apple rents AI infrastructure from Google AWS Azure. Everyone buys Nvidia chips. They pay each other for cloud capacity. AI spending added 0.5% to GDP. Without it GDP would've grown 0.6%. Only Meta showing actual AI revenue. Everyone else just spending hoping it pays off. Goldman Sachs and Sequoia reports say ROI is nonexistent so far. But they can't stop spending or stocks crash. Locked in arms race. The 7 biggest tech companies are 37% of S&P 500. Made up 54% of gains in 2024. Your 401k is probably 37% bet on AI spending paying off. If it doesn't they're massively overvalued at 35x earnings. Firing people to fund buying stuff from each other while making no profit yet.

Source:

https://www.cnbc.com/2025/10/27/amazon-targets-as-many-as-30000-corporate-job-cuts.html