After months of painful job cuts, companies in San Francisco’s tech sector stepped up hiring in May, spurred in part by an artificial intelligence boom, according to a new report.

San Francisco and neighboring San Mateo County added 2,800 jobs in the tech sector in May, according to the city’s latest employment update. The new hires mean the region has recovered 38% of jobs since a wave of industry cuts began in late 2022, said San Francisco’s chief economist Ted Egan.

“The stock market, especially Big Tech, is doing very well this year and that tends to be a leading indicator for hiring, especially in San Francisco,” said Egan. He expects the artificial intelligence sector accounted for much of the job growth given the “huge chunk of buzz” the industry is generating.

Companies like OpenAI, the maker of ChatGPT, and Anthropic, which recently raised $450 million for a competing AI-powered chatbot, are both based in San Francisco. While the latest data indicates an AI-fueled hiring increase, it does not provide a breakdown of where the new jobs were located between San Francisco and nearby cities to the south in San Mateo County.

The news is a welcome development for San Francisco, said Egan. The city is dealing with one of the country’s worst pandemic-era recoveries. Bay Area tech companies including Salesforce, Alphabet, and Meta saw a massive hiring spree during the pandemic before pulling back in 2022 as rising interest rates hit the industry. Since then, many employers have exited office space as retailers flee San Francisco’s blighted downtown core.

But Egan said tech industry growth will not necessarily translate into new office occupancies as remote work becomes a permanent trend for tech workers. San Francisco’s office vacancy rate soared to a record high of nearly 32% in the second quarter, according to data from CBRE Group.

“That is a separate problem for downtown,” said Egan.