06/07/2026
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06/07/2026
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REDMOND, Washington, Jul 6: Microsoft is cutting about 4,800 jobs, or roughly 2.1% of its global workforce, as the technology giant intensifies investments in artificial intelligence while seeking to reduce costs and improve efficiency across its business.
The latest round of layoffs comes amid a broader wave of job cuts across the technology sector, with major companies under increasing pressure to justify massive spending on AI infrastructure. Industry-wide investment in artificial intelligence is expected to exceed $700 billion this year, prompting firms to streamline operations and offset soaring costs.
The layoffs were announced on Monday after a difficult first half of 2026 for Microsoft, whose shares have fallen nearly 23% since the start of the year—its weakest first-half performance since 2022. Earlier this year, the company also offered voluntary buyouts to around 9,000 U.S. employees, representing about 7% of its American workforce, as part of its annual spending review.
Despite strong growth in its Azure cloud computing business, fueled by rising demand for AI services, Microsoft is facing mounting expenses from building and expanding data centers needed to support those technologies. The company previously projected $190 billion in spending for 2026, far exceeding market expectations.
Microsoft has also warned that AI is reshaping its traditional software business by automating many routine tasks, while higher memory chip prices linked to AI-driven data center demand have increased costs across its hardware division. The company recently raised prices for its Xbox gaming consoles amid weakening consumer demand.
Adding to the pressure, Xbox division head Asha Sharma recently told employees that the gaming business requires a "reset," revealing that its profit margin had fallen to just 3%. She said Microsoft had invested more than $20 billion in gaming content, platforms and hardware subsidies over the past five years, excluding the Activision Blizzard acquisition, even as annual revenue declined by nearly $500 million.
Reports have also suggested Microsoft is evaluating strategic options for its Xbox business, including a potential restructuring or spinning it off into a wholly owned subsidiary.
The company is expected to release its latest quarterly financial results later this month, with investors closely watching whether its massive AI investments can translate into stronger long-term growth while easing concerns over rising costs.
