06.07.2026
2 min
15
Microsoft has announced the layoff of approximately 4,800 employees, representing about 2.1% of its global workforce. The move comes amid massive investments in artificial intelligence, prompting the world’s largest technology companies to increasingly reassess their spending and business structures.
Microsoft announced the latest round of layoffs following a difficult first half of 2026. Since the beginning of the year, the company’s stock has fallen by nearly 23%, marking its worst performance since 2022. Despite this, Microsoft continues to invest heavily in AI infrastructure while cutting costs across other parts of the business.
The layoffs are part of a broader wave of workforce reductions across the tech industry. Earlier this year, both Amazon and Meta cut thousands of jobs as investors increasingly demanded tangible financial returns from the billions of dollars being poured into artificial intelligence. Global AI spending is expected to exceed $700 billion this year.
Earlier in the year, Microsoft offered voluntary separation packages to around 9,000 employees in the United States, representing roughly 7% of its U.S. workforce. The company also traditionally reviews staffing levels at the end of its fiscal year in June, when it sets budgets and priorities for the next financial period. Previous reports had also suggested that up to 5,500 additional positions could be eliminated.
Despite the layoffs, demand for AI products continues to drive rapid growth in Microsoft’s Azure cloud business. Until April, Azure remained the exclusive cloud provider for OpenAI’s models. At the same time, the construction of new AI data centers has significantly increased the company’s spending and placed additional pressure on its cash flow.
In April, Microsoft projected Azure quarterly sales above analysts’ expectations while also unveiling a record $190 billion capital expenditure plan for 2026, far exceeding market forecasts.
The rapid expansion of artificial intelligence presents another challenge for Microsoft. AI tools are increasingly capable of automating routine business tasks, creating potential risks for the company’s traditional software business. At the same time, soaring memory chip prices driven by the AI data center boom have forced Microsoft to raise Xbox console prices during a period of already weak consumer demand.
Microsoft’s Xbox gaming division is also undergoing major restructuring. Its new president, Asha Sharma, said the business requires a complete “reset” after its operating margin fell to just 3%.
In a message to employees, she wrote:
“Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
According to The Information, Microsoft is also exploring several long-term options for Xbox, including spinning the gaming business off into a separate subsidiary or pursuing other restructuring scenarios.
This is not the first time Microsoft has carried out large-scale layoffs. The company routinely adjusts its workforce at the end of each fiscal year, but the current round comes amid unprecedented investment in artificial intelligence. Other major technology companies have recently adopted a similar strategy, cutting costs while significantly increasing spending on AI initiatives.
