The Myth of the Tech Recession

If you relied solely on headline news to understand the economy, you would assume Silicon Valley is currently a ghost town. For four years, the narrative has been relentless: mass layoffs, austerity, and the bursting of the pandemic bubble. We are told the party is over.

But if you ignore the press releases and actually read the 10-K filings, a boring, profitable reality emerges. The tech giants are not shrinking. They are molting.

Data from the end of 2025 confirms what pragmatic observers have suspected for some time: despite the theatrical announcements of workforce reductions, headcount at the world’s largest tech companies has remained flat or, in some cases, actually risen. This is not a recession. It is a rotation of human capital.

The Disconnect Between PR and Payroll

Let’s look at the numbers, specifically for Alphabet and Amazon. These entities are proxies for the broader industry.

By December 31, 2025, Alphabet’s global headcount had actually risen by nearly 7,500 year-over-year. In fact, their staffing levels are barely below their absolute peak in 2023 and higher than when the so-called “layoff era” began in late 2022. Amazon shows a similar pattern. After shedding workers in 2022 and 2023, Amazon’s headcount rose by 20,000 in 2025, bringing their total to 1.576 million. That is only a 2% deviation from their historic high.

There is a massive cognitive dissonance here. How can companies dominate the news cycle with stories of “structural changes” and “pink slips” while simultaneously paying more salaries than they did a year ago?

The answer lies in the difference between gross movement and net movement. The media reports gross layoffs because tragedy sells ads. Investors look at net headcount because capacity drives revenue. The net reality is that these companies are not cutting back; they are cleaning up.

The Great Binge and the Necessary Purge

To understand the current stasis, you have to look at the gluttony that preceded it. The hiring behavior of Big Tech in 2020 and 2021 was not strategic; it was manic. Fueled by cheap capital and the remote-work distortion, Alphabet surged its headcount by 60% in two years. Amazon was even more aggressive, more than doubling its workforce by adding 810,000 people—a figure that is frankly absurd from an operational management perspective.

This was the era of hoarding talent. Companies hired people not because they had work for them to do, but to keep them away from competitors. We saw the rise of the “remote worker” holding down multiple full-time jobs, contributing marginal value to each.

What we are seeing now is the inevitable digestion of that binge. The layoffs are real, but they are being matched almost 1:1 by new hires. This is the “sorting out” phase. Companies are shedding low-ROI roles—legacy projects, middle management layers, and recalcitrant remote workers—and replacing them with high-ROI roles, specifically in AI and automation.

The Logic of the Swap

Intuit provided the perfect case study for this dynamic in mid-2024. They announced the layoff of 1,800 employees, roughly 10% of their workforce. The press mourned the cuts. But in the same breath, Intuit announced plans to hire 1,800 new employees to focus on AI.

Net headcount change: Zero. Skill composition change: 100%.

This is the mechanism driving the industry. Laying off a project manager who oversees a legacy database to hire a machine learning engineer is not “downsizing.” It is capital reallocation. It is faster to fire and re-hire than to retrain. That is cold, but it is the economic reality of rapid technological shifts.

Amazon is doing the same. They are cycling through their workforce to remove what we might politely call “deadwood”—those who flourished during the lack of oversight in 2020 but fail under stricter performance metrics. They are swapping labor for automation in logistics and swapping generalists for specialists in cloud computing.

Killing the Middleman

Perhaps the most optimistic signal for shareholders is where the cuts are actually happening. Google explicitly targeted the “management tax.” In August, reports surfaced that they were sweeping out 35% of managers overseeing small teams.

In corporate structures, layers of management act as friction. They slow decision-making and dilute signal. By removing these layers while keeping individual contributors flat or growing, organizations increase their metabolic rate. They aren’t just cutting costs; they are removing obstacles to execution.

The Verdict

Stop waiting for the tech bubble to burst in the employment data. It already expanded, and now it is hardening. The “mass layoffs” are a functional illusion—a revolving door where the skills of 2019 are shown the exit to make room for the requirements of 2026.

The companies are not getting smaller. They are getting denser with talent that actually matters to the bottom line. If you are an investor, this flat headcount combined with rising revenue is the holy grail: operational leverage. If you are an employee, the lesson is even simpler. Safety isn’t found in a contract; it’s found in relevance.