Snap plans to lay off 16% of its staff, counts on AI to boost revenue

Snap announced plans to terminate 1,000 jobs on Wednesday, downscaling its full-time staff by 16%, making it the latest US tech firm to scale back its workforce in favor of increased AI adoption, following Oracle, Meta and Amazon.

Snap's plan will also close more than 300 open roles, on top of laying off existing employees across the globe, according to a Wednesday memo sent by Evan Spiegel, the chief executive of the California-based social media company. The plan is meant to serve the company's pivot towards profitable growth, Spiegel wrote, expecting the job cuts could save Snap more than $500 million by the second half of this year.

The plan marks the fourth major layoff of the company in the past 4 years. Snap laid off 10% of its employees in 2024 and reduced 20% of its workforce in 2022, citing sluggish growth in advertising revenue.

The announcement restored some confidence among investors, as Snap's share closed up 7.68% on Wednesday. With its stock falling more than 30% so far this year, the company has been under pressure to improve its profitability. 

Irenic Capital Management, the activist investor owning 2.5% of Snap's shares, had urged the social media company last month to cut costs and optimize its portfolio, which includes cutting back on the company's augmented-reality hardware department.

Snap put its faith in artificial intelligence, which enables the company to "increase velocity, and better support our community, partners, and advertisers," the memo wrote. According to an investor update filed on Wednesday, more than 65% of its new codes are generated by AI.

A number of US tech companies had planned for major layoffs this year while leaning heavily on AI. 

Oracle, a cloud infrastructure company in Texas, has laid off thousands of employees via email in late March, according to CNBC, after the company planned in January to raise $50 billion in debt to build its AI data center. 

Meta, the owner of Facebook and Instagram, also reportedly planned to scale down 20% of its workforce in March, pivoting more of its resources towards developing AI models and data center construction. 

(With inputs from agencies)