Tech economy 2025–2026: AI, layoffs and capital explained

The period opened with an early lesson about corporate storytelling. In Australia, the Commonwealth Bank had to rehire 45 employees after the union showed that the claimed savings from a chatbot did not match a call volume that kept rising. Months later, a Goldman Sachs analysis noted that the market no longer rewards layoffs, not even those framed as automation: shares of companies announcing them fall 2% on average. In 2026 the term "AI-washing" also took hold, for firms that blame AI without evidence that it replaced anyone.

The most explicit cases came later. Cloudflare announced 1,100 layoffs, about 20% of its staff, despite beating forecasts, and presented AI as a direct replacement for certain roles; its shares fell 24% the next day. Oracle cut about 21,000 jobs in a year at a cost of roughly $1.8 billion while strengthening its data centers. Meta, according to reports, was weighing a cut of 20% or more to offset AI infrastructure spending.

The wider labor market felt it too. In Canada, tech job postings fell 19% against 2020, although machine-learning and AI-infrastructure roles stayed above pre-pandemic levels. In Seattle, big-tech layoffs spread to hospitality, retail and office space.

Data-center investment became the sector's largest line item and is increasingly funded with debt. Deutsche Bank studied how to hedge its exposure after lending billions to such projects, in a climate where the enthusiasm was being compared to the dot-com era. Scale is now measured in power: a 1 GW data center draws as much as a city of a million people. And whoever sells the hardware gets paid first: Dell shares rose 32.76% in a day and its AI server revenue grew 757%, to $16.1 billion.

The big 2026 announcements follow the same logic. Mistral AI raised $830 million in debt from a consortium of banks to buy chips and open its own data center near Paris, its first financing of this kind. SoftBank pledged up to 75 billion euros for 5 GW in France, and Alphabet planned to raise $80 billion, including $10 billion from Berkshire Hathaway.

Returns, however, are not obvious. A PwC survey of more than 4,500 executives found that 56% had gained no benefit from their AI investments and only 12% saw lower costs and higher revenue at once. Goldman Sachs launched an S&P 500 index without AI companies, removing about 45% of the index, for those seeking protection from market noise.

Private capital was active in traditional software and entertainment. Bending Spoons agreed to buy Vimeo for $1.38 billion in cash, and Electronic Arts was reportedly negotiating a deal of about $50 billion to go private, among the largest leveraged buyouts in history. In 2026, EQT sounded out a sale of SUSE for about $6 billion, double its value at the time it was taken private, although market volatility and fears that AI could make some software obsolete complicated deals.

Outside the United States, AI redrew the map with a strong sovereignty angle. Cohere and Aleph Alpha announced a merger valued at about $20 billion as an alternative to the big US providers, with around 90% held by Cohere's investors. In Germany, n8n doubled its valuation to $5.2 billion after being embedded in SAP's platform. Moonshot AI, valued at $20 billion, dismantled its structure ahead of a Hong Kong listing, DeepSeek prepared its first outside round of about $7 billion, and Mistral bought Emmi AI, its second acquisition of 2026.

Several companies tried to offset costs by changing the rules for customers already inside. Futurehome, bankrupt since May 2025, required an annual subscription for its home devices to keep control and automations. Pocket Casts showed ads to users who had paid for an ad-free version, which its parent company blamed on a bug. And GoFundMe created 1.4 million donation pages for nonprofits without their consent, with an optional 16.5% tip.

The memory shortage shifted pressure onto hardware. With the spot market almost nonexistent and manufacturers inclined to serve large customers such as AI buyers, Russian enthusiasts explored soldering their own DDR5 modules, and refurbished laptop sales grew in Europe, with around 40% concentrated between $235 and $355. Panasonic, for its part, handed manufacturing, marketing and sales of its TVs to Skyworth, a turn for a brand that prided itself on in-house production.