Wix’s historic cuts could become a turning point for Israeli high-tech
The layoffs highlight how AI is beginning to reshape not only software products, but the economics of tech employment itself.
On Monday, Wix dropped what may become the most significant, and unsurprising, bombshell yet in the Israeli high-tech sector, announcing the layoff of 1,000 employees. This is the largest workforce reduction in the company’s history and will affect approximately 20% of its employees. Wix is set to become the first major Israeli software company to be directly hit by the AI upheaval and the SaaS crisis that has accompanied it, forcing it to resort to mass layoffs.
Although Wix is widely perceived as relatively bloated in terms of workforce and as having accumulated organizational inefficiencies over the years, it is also considered one of the anchors and symbols of the Israeli tech industry. As a result, such a move could loosen the restraints holding back other companies from carrying out layoffs that are already looming internally.
1.
The stock of Wix, the veteran internet company, as well as other software companies such as Nice and monday.com, is under pressure from AI, and its share price has collapsed. Wix stock has lost about 50% of its value since the beginning of 2026, and the company is now valued at only about $2 billion, compared to a peak valuation of roughly $20 billion in 2021.
The sharp decline in valuation, similar to what has happened with Nice and monday.com, stems from investor concerns that many of these companies’ solutions could be replaced by new AI technologies that already enable relatively fast and simple programming, even for non-expert users.
Wix is indeed the first major Israeli company to embark on painful and deep cuts tied directly to the AI revolution, but the process has already begun globally. Just last weekend, internet giant Meta laid off 8,000 employees, including workers in Israel, while American software company Intuit cut 3,000 jobs, representing 17% of its workforce.
2.
Although every company has its own specific circumstances, Wix’s move illustrates the broader fears surrounding the Israeli high-tech sector in particular and the global software industry in general.
The central question is whether software companies that enjoyed two decades of extraordinary growth and expanded massively during that period will continue to need such large workforces. On one hand, much of the work can increasingly be done using AI, not only programming, but also marketing, operations and customer support. On the other hand, these companies fear losing existing customers and struggling to recruit new ones because some of their services can now be performed independently using AI tools.
This pincer movement is creating enormous pressure on both the finance departments and boards of directors of technology companies.
What makes the situation in Israel even more difficult is the exchange rate. The shekel has strengthened dramatically since the beginning of the year, increasing the dollar-denominated cost of Israeli high-tech workers by around 20%. When management already doubts the necessity of certain positions, and employees simultaneously become significantly more expensive, arguably the most expensive software workforce in the world today, the conditions for a perfect storm emerge.
The Bank of Israel’s decision yesterday to cut interest rates by 0.25% may slightly slow the strengthening of the shekel, but according to most estimates, the effect will be limited. The cut is relatively small, and the shekel is also heavily influenced by developments on Wall Street.
As long as US stock indices continue rising, a trend reinforced by the emerging agreement between the United States and Iran, institutional investment flows are likely to continue pushing the shekel higher. According to sources familiar with the local high-tech industry, many companies, from startups to large corporations, have already frozen hiring in Israel while waiting to see whether the dollar-shekel exchange rate stabilizes below three shekels to the dollar.
3.
Until now, AI-driven layoffs in Israel had largely remained a warning voiced by economists and technology experts. Globally, however, the trend has already become much more tangible, and announcing cuts tied to AI adoption has increasingly become the accepted narrative, particularly from the perspective of investors, which ultimately remains the key benchmark for software companies.
Software sector stocks have plunged by tens of percentage points over the past six months, even among companies that published strong financial reports and optimistic forecasts.
To stem the decline and restore investor confidence, many companies, including Wix, have used the billions of dollars accumulated during the boom years to launch aggressive share buyback programs. In many cases, these buybacks have reached unprecedented scale.
Wix, for example, repurchased 30% of its shares for $1.6 billion in an effort to signal confidence in its future despite the AI disruption. Industry giants such as Adobe and Salesforce have also announced unusually large buyback programs worth $25 billion and $50 billion respectively. Salesforce alone reportedly repurchased $25 billion worth of shares within roughly a month, in what has been described as the largest buyback in the history of the software industry.
So far, however, the billions poured into repurchases have failed to revive the stocks. Wix paid investors $92 per share in its buyback program, but the stock has since fallen another 42% to around $53.
When buybacks fail, companies move to the next step in the corporate crisis playbook: layoffs. So far, however, even that has failed to reverse the negative trend in software stocks.
4.
For the first time, the high-tech industry now finds itself facing the kind of disruption it was once responsible for imposing on others.
For decades, technology companies disrupted traditional industries with innovative software solutions that transformed business models and reshaped entire markets. Now, AI is disrupting the software industry itself from top to bottom.
So far, the industry has responded with familiar tools, share buybacks aimed at boosting earnings per share and workforce reductions aimed at improving efficiency, but it remains unclear whether these are the right solutions for the scale of the transformation underway.
As happened previously in disrupted industries, software companies may eventually need entirely new business models. Some are already beginning to experiment with changes such as shifting from charging per employee “seat” to usage-based pricing models.
Another major transformation concerns the nature of software development roles themselves. The traditional separation between frontend and backend development is already beginning to erode.
Wix itself, often viewed as a trendsetter within Israeli high-tech, announced several months ago that it would redefine the role of its developers so they would oversee the entire development process in order to adapt to the new AI environment.
But the core question remains unresolved: how much of the work currently performed by technology professionals can ultimately be replaced by artificial intelligence, and what entirely new professions might emerge instead?
The current layoffs at Wix may prove to be only the first chapter in a much larger transformation.
