Jefferies says Meta headcount cuts could show AI deliver real productivity gains

After Reuters reported that Meta is evaluating broad job cuts of up to 20% of its workforce, Jefferies analyst Brent Thill said such a headcount reduction would “reinforce that AI is beginning to deliver real productivity gains at scale.” While the market has seen significant layoffs at companies like Block (XYZ), which laid off 40% of headcount “due to AI,” if Meta is willing to reduce headcount at this scale while ramping AI investment, the firm thinks it “signals a broader shift,” the analyst tells investors. The takeaway is not just better Meta margins, but a broader readthrough for tech/software as investors reassess the link between headcount, growth and profitability, argues the analyst, who keeps a Buy rating and $1,000 price target on Meta shares.