AI looms over strong job market. Here’s why

The January unemployment rate held steady at 4.3%, still within the healthy range that signals a functioning labor market. But dig beneath that headline number and the picture gets murkier. Initial jobless claims jumped 16% in the past month to 231,000, the highest level since mid-January and well above the 52-week average. That’s not crisis territory yet, but the trajectory matters more than the snapshot.

What’s driving the uptick? Look at Big Tech’s playbook. Meta Platforms (NASDAQ:META | META Price Prediction) just recorded $1.8 billion in severance charges for planned role eliminations in Q4 2025, even as revenue climbed 24% year-over-year. The company’s betting everything on AI infrastructure, guiding $115-135 billion in capex for 2026. CEO Mark Zuckerberg is chasing what he calls “advancing personal superintelligence,” but that vision comes with a human cost. Operating margins compressed from 48% to 41% as AI spending surged 40%.

Amazon (NASDAQ:AMZN) tells the same story with bigger numbers. The company announced 16,000 job cuts in late January, the second major round in three months, bringing total corporate reductions to roughly 30,000 roles. CEO Andy Jassy didn’t mince words about the reason: “expanding the adoption of artificial intelligence tools, which will lead to more automation and corporate job losses.” Meanwhile, Amazon’s projecting $200 billion in capex for 2026, with over 1 million robots already deployed using AI optimization.

The market’s split on whether this trade-off works. META’s stock is essentially flat over the past year, down 7%. Amazon’s fallen 12% over the same period and dropped 17% in just the past month. Investors are questioning whether AI productivity gains can offset the staggering infrastructure costs before patience runs out.