Microsoft has announced the layoff of 9,000 workers globally, representing just under 4% of its total workforce, in a sweeping move aimed at boosting operational efficiency and accelerating its pivot toward artificial intelligence.
The tech giant, which employed about 228,000 staff as of June 2024, said the cuts are not due to falling revenues but are instead part of a strategic trade-off, redirecting human resource costs toward building next-generation computing infrastructure. The company is investing heavily in custom chips, advanced GPUs, and AI data centres.
The layoffs, which kicked off as Microsoft opened its 2026 fiscal year, follow months of trimming, including 6,000 job losses in May and 300 in June. The cuts affect multiple divisions including Xbox, Candy Crush maker King, Bethesda, and ZeniMax. Sales, operations, and engineering departments are also impacted as Microsoft reconfigures its workforce to enable faster decision-making and tighter alignment with its AI-first strategy. Internal policies now include strict rehire bans for underperforming ex-employees and an emphasis on “good attrition.”
Despite these reductions, Microsoft remains financially sound, reporting a massive $25.8 billion net income in the March quarter, a year-on-year jump of 18%. The company is channelling over half of its record $80 billion capital expenditure for fiscal 2025 into AI infrastructure, including nuclear-powered data centres in Finland and thousands of Nvidia H100 GPUs. According to insiders, the move represents a “straight swap: fewer salaries, more silicon,” with projected savings of $1.7 billion annually to fund its AI transition.
Microsoft’s actions mirror a broader trend across the tech industry, where over 75,000 jobs have been lost in the first half of 2025 alone. Meta, Alphabet, and Amazon have all announced similar cost-cutting and performance-driven layoffs.
Nonetheless, investor confidence in Microsoft remains strong, with its stock reaching a record $497.45 in June. Analysts project Azure and enterprise software sales will drive 14% revenue growth in the June quarter, reaffirming the company’s focus on scalability, speed, and AI leadership.