Microsoft’s announcement a week ago about a scheduled round of layoffs had spread uncertainty. The company had said less than 2.5 per cent of its workforce would be affected without specifying a number. Now, it is known that the latest round of job cuts will impact about 4,800 employees—roughly 2.1 per cent of its global workforce.
The decision comes after a difficult first half of 2026, with shares of Microsoft dropping nearly 23 per cent, marking its worst performance since 2022.
The layoffs are part of a wider trend across Big Tech, where companies are pouring billions into artificial intelligence infrastructure while trimming staff to offset costs. Industry spending on AI is expected to cross $700 billion this year, putting pressure on firms to show quick returns. Amazon and Meta have also let go of thousands of workers in recent months.
Microsoft had already offered voluntary buyouts to about 9,000 US employees earlier this year. The company often reduces headcount near the end of its fiscal year in June, aligning with new spending plans.
While demand for AI services has boosted growth at Microsoft’s Azure cloud business, the cost of building massive data centres is squeezing cash flows. In April, Microsoft projected $190 billion in spending for 2026—far higher than analysts expected. Rising memory chip prices have also forced the company to increase Xbox console prices, even as demand for the device weakens.
The company is set to report earnings later this month. Whether heavy bets on AI can balance the financial strain and reassure a workforce now facing deep uncertainty remains to be seen.
