Co-founder Eran Zinman stated, "The decision was not made to reduce costs or replace people with AI." He said the layoffs are part of a restructuring tied to Monday.com's shift toward an AI-driven business model. Instead, the company wants to get leaner and more focused on building AI tools into its platform.
Financial projections support the notion that this move is strategic rather than driven by financial distress. While this growth rate is more modest than the explosive expansion experienced by many tech firms earlier in the decade, it remains solid.
Monday.com is far from alone.
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What is interesting is the reason many of these companies give for the layoffs. A growing number are pointing to AI as the driver. They say they need to reorganize their teams to focus on artificial intelligence, even if that means trimming headcount in older parts of the business.
The catch: Wall Street is not buying it. Firms citing AI as the reason for layoffs have seen their stocks trail the Nasdaq by close to 10% in the month following the news. Investors seem skeptical that a pivot to AI is really the motive, or at least they are not rewarding it right away.
Meanwhile, dedicated AI firms such as Anthropic and OpenAI are aggressively expanding their workforces. Some of the firms making cuts are also quietly shifting people into new AI roles. So the overall number of tech jobs may not be shrinking as much as it looks - the work is just moving to different places. This dual trend highlights a broader rebalancing of the tech labor market, where traditional software roles are giving way to positions focused on AI development and integration.
Monday.com's move fits a pattern seen across the tech industry: established companies are downsizing legacy functions to free up capital and talent for AI initiatives. The company plans to reallocate resources toward developing AI features such as automated task management and predictive analytics, aiming to compete with other work management platforms that are also integrating AI. This restructuring, while costly in the short term, is intended to position Monday.com for the next wave of software growth, where AI capabilities become a primary differentiator.
These layoffs are part of a wider recalibration in the technology sector, where legacy software roles are being phased out to make room for AI specialists. Even as companies like Monday.com cut staff, they are simultaneously hiring for new positions focused on machine learning, natural language processing, and product integration. The net effect is a shifting rather than a shrinking job market, a trend that has accelerated since late 2025 as generative AI tools have become more commercially viable. Analysts note that the restructuring costs, while significant, are often offset by anticipated gains in efficiency and new revenue streams from AI-enhanced products.
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