Amazon Cuts 14,000 Corporate Jobs While Accelerating $40 Billion AI Investment Strategy

Amazon is set to eliminate approximately 14,000 corporate positions as the e-commerce giant increases investments in artificial intelligence while reducing expenses in other areas.

CEO Andy Jassy, who has been focused on cost-cutting measures since taking the helm in 2021, previously indicated that generative AI would likely lead to a reduction in Amazon's corporate workforce over the coming years.

Jassy revealed that Amazon has developed more than 1,000 generative AI services and applications, describing this as just a "small fraction" of their planned AI initiatives. He has encouraged employees to embrace the company's AI strategy.

Earlier this year, Amazon announced a $10 billion investment to construct a campus in North Carolina aimed at expanding its cloud computing and AI infrastructure.

Since the beginning of 2024, Amazon has committed approximately $40 billion to data center projects across Mississippi, Indiana, Ohio, and North Carolina as it strengthens its infrastructure to compete with tech rivals in meeting the growing demand for AI products.

Amazon is competing directly with industry leaders like OpenAI, Google, and Microsoft in the AI sector. During an analyst call in May, Jassy emphasized the enormous growth potential for Amazon's AWS business.

"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. You can see that in the 1,000-plus AI applications we're building across Amazon. You can see that with our next generation of Alexa, named Alexa+," Jassy stated.

In Tuesday's announcement, Amazon emphasized its efforts to reduce bureaucracy.

"The reductions we're sharing today 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," said Beth Galetti, Senior Vice President of People Experience and Technology at Amazon, in a message to employees.

Affected employees will be notified on Tuesday. Most will receive 90 days to seek internal reassignment. Those unable to find new roles within the company, or choosing not to search for one, will receive transitional support including severance packages, outplacement services, and continued health insurance benefits.

Amazon currently employs around 350,000 corporate workers within its total workforce of approximately 1.56 million. The announced cuts represent roughly a 4% reduction in the corporate workforce.

Neil Saunders, managing director of GlobalData, described the layoffs as "a deep cleaning of Amazon's corporate workforce."

"Unlike the Target layoffs, Amazon is operating from a position of strength," Saunders noted. "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."

However, Saunders pointed out that Amazon is not immune to external factors as global markets tighten and operational costs increase.

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

Amazon is scheduled to release its quarterly financial results on Thursday.