SEATTLE – Amazon.com Inc. shocked the tech sector on Tuesday with plans to cut 27,000 jobs, the biggest reduction since its 1994 launch. The cuts represent about 8% of its global corporate workforce and 5% of total staff. Most roles are white-collar positions in its consumer, cloud, and advertising units, with the majority based in the United States. Many departures take effect immediately.
Chief Executive Andy Jassy told staff in a memo seen by The Wall Street Journal that this was the hardest call of his tenure. He pointed to three pressures that intersect. Online retail growth has slowed for an extended period, AWS margins have tightened, and a shift toward generative AI requires a leaner cost base.
The scale surpasses previous rounds. The company removed 18,000 positions in early 2023 as it recalibrated after the pandemic surge. With the new cuts, Amazon has shed more than 54,000 jobs under Jassy, a sign of a deeper structural reset.
Why the Move Now
Amazon’s core retail arm has stalled. US e-commerce sales grew only 3.1% year over year in the third quarter, according to recent Commerce Department figures. That is the slowest rate since the 2008 financial crisis. Physical retail has failed to offset the slowdown. Whole Foods’ same-store sales fell 1.4% as grocery prices eased and households watched their budgets.
AWS, the main source of operating profit, faces its own squeeze. Spending on infrastructure-as-a-service remains solid, yet price competition from Microsoft Azure and Google Cloud has dented average revenue per customer. AWS’s operating margin slipped to 29.8% in the third quarter, down from 35.2% a year ago, company filings show. Jassy said customers are trimming and tuning workloads more aggressively than expected.
Artificial intelligence is the third and likely most decisive factor. Amazon has earmarked 100 billion dollars through 2028 for training large language models and rolling out inference chips across its data centres. Project Olympus, Amazon’s internal response to OpenAI’s GPT line, has already absorbed 12 billion dollars of capital spending this year. To fund this build without weakening returns, leaders have been told to remove roles that do not directly push the AI flywheel.
Who is Impacted by the Amazon Cuts
The reductions fall mainly on corporate and technical teams, not hourly warehouse and delivery staff. A breakdown shared with WSJ by people familiar with the plan shows:
- Consumer division, 14,000 roles: category management, merchandising, and marketing. The Prime Video content-acquisition team in Los Angeles, with about 800 employees, will be shut down as Amazon pivots to licensed content and sports rights.
- AWS, 7,500 roles: sales, solutions architecture, and professional services. Core engineering groups working on Trainium and Inferentia chips are not affected, which signals continued focus on hardware.
- Advertising, 3,000 roles: mostly mid-level account leads and campaign analysts. The ad unit is still growing 19% year over year, but take rates have flattened as retailers trim performance spend.
- Devices & Services, 1,500 roles: remaining Alexa teams, including voice design specialists and hardware programme managers. Echo devices will stay on shelves, but new form factor development has stopped.
- Corporate functions, 1,000 roles: legal, finance, and HR staff tied to the cut organizations.
About 63% of the cuts will be in the Seattle area, where Amazon has around 75,000 corporate employees. California will lose 4,800 jobs, mainly in Los Angeles and the Bay Area. The UK, Germany, and India will each see reductions in the low thousands, largely in overlapping back-office work.
Hourly fulfilment workers remain largely unaffected. A spokesperson said fulfillment capacity is aligned with holiday demand plans.
Severance and Support
Those laid off will receive 20 weeks of base pay plus one week for each year of service, capped at 40 weeks. Health cover will continue until 31 March 2026. Amazon will offer outplacement support through Lee Hecht Harrison. Stock awards due to vest in February will accelerate for employees with at least one year of service.
Amazon also set aside 100 million dollars for a Second Act fund that will match employee donations to charities supporting displaced tech workers. Labour groups welcomed the help but questioned its reach. They noted that a typical mid-level manager package, about 180,000 dollars, will not ease the wider freeze in Seattle’s tech hiring.
Amazon shares rose 2.4% in after-hours trading as investors backed the cost reset. Bernstein analysts called the cuts overdue, lifted their rating to Outperform, and set a 230 price target. The firm expects the move to add 3.8 billion dollars to annual free cash flow by 2027.
Elected officials responded quickly. Washington Governor Jay Inslee called the news a blow to working families and renewed support for a state capital gains tax on stock-based pay. Senator Maria Cantwell, chair of the Commerce Committee, said she plans a hearing next month on the human impact of AI-driven consolidation.
Amazon Stock Rises
Amazon’s decision comes amid wider retrenchment across Silicon Valley. Meta cut 11,000 jobs last November, and Alphabet has removed 12,000 since January. The size and speed of Amazon’s cuts, done in a single day rather than in waves, reflect a sharper turn. Jassy said operating with startup-like agility is no longer a slogan; it is required to compete.
For many of those affected, the promise of AI-led growth feels distant. Sarah Nguyen, a 34-year-old senior product manager in the consumer electronics group who was laid off via a morning calendar invite, said she had moved from Austin to Seattle 14 months ago at the company’s request. She said the mission of customer obsession now feels directed at shareholders first.
As Amazon prepares for what Jassy called the most consequential decade in the company’s history, these cuts serve as both a warning and a blueprint. To win in artificial intelligence, even the strongest balance sheets must make room for the machines.
Amazon’s stock price rose by approximately 1.2% to 1.6% on October 27, 2025, closing at $226.97, following reports of planned layoffs of up to 30,000 corporate jobs starting October 28, 2025.
The increase suggests investor confidence in Amazon’s cost-cutting strategy, which aims to address overhiring during the pandemic and streamline operations through increased use of AI and automation. Analysts remain optimistic about Amazon’s Q3 earnings, expected to be reported on October 30, 2025, driven by AI initiatives and expansion in Europe, despite a 1.9% stock decline over the quarter.
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