Meta Stock Is Lagging Its Rivals — Will AI Layoffs Change That?

TLDR

• Meta began laying off around 8,000 employees — roughly 10% of its workforce — on Wednesday, May 20.
• The cuts are part of a broader restructuring to fund approximately $135 billion in capital expenditures in 2026, mostly tied to AI.
• Around 7,000 employees are being moved into newly created AI-focused roles within the company.
• META stock has fallen 8.7% in 2026, while rivals Alphabet and Amazon have gained 24% and 12% respectively this year.
• Senator Bernie Sanders publicly criticised the layoffs, asking what AI would mean for the broader American workforce.

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Meta’s AI-driven overhaul is now fully underway — and thousands of jobs are on the line.

Meta Platforms, Inc., META

The company began its previously planned mass layoffs on Wednesday, according to a report from The Wall Street Journal citing an internal memo and people familiar with the matter.

Around 8,000 employees are being let go, representing close to 10% of Meta’s total headcount. The company also closed roughly 6,000 open positions as part of the restructuring.

META stock traded at $605.74 on Wednesday, up about 0.5% on the day. In after-hours trading it slipped slightly to $603.60.

The stock is still down 8.7% year-to-date as of Tuesday’s close, a number that reflects investor unease about whether Meta’s massive AI bets will pay off.

The Scale of Meta’s AI Bet

Meta is projecting capital expenditures of between $115 billion and $135 billion in 2026, with the bulk of that going toward AI infrastructure and data center buildout.

The company is competing directly with OpenAI, Alphabet, and Anthropic for leadership in the space.

Alongside the job cuts, roughly 7,000 employees are being reassigned into newly formed AI-focused teams — a signal that Meta isn’t stepping back from the technology, it’s doubling down.

Zuckerberg acknowledged the uncertainty at an April town hall: “I wish I can tell you that I have a crystal ball plan for the next three years of how all this stuff is going to play out. I don’t. I don’t think anyone does.”

Wall Street and Washington React

Morgan Stanley analyst Brian Nowak estimates the layoffs will result in an $800 million one-time charge. He expects the restructuring to generate $2 billion in savings in fiscal 2026 and $3.5 billion in 2027.

Morgan Stanley kept its Overweight rating and $775 price target on the stock.

Sanders, ranking member of the Senate Health, Education, Labor and Pensions Committee, invited workers affected by AI and robotics to submit their stories through a Senate outreach form.

For context on where META stands in the Magnificent Seven: Alphabet is up 24% this year and 130% over the past 12 months. Amazon has gained 12% in 2026. Meta’s 8.7% decline puts it near the back of the pack.

According to Benzinga Edge Stock Rankings, META scores in the 89th percentile for Growth, though the stock remains in a negative trend across short, medium, and long-term timeframes.

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