Web Desk: Microsoft is cutting about 4,800 jobs, or roughly 2.1% of its global workforce, as the technology giant pushes ahead with massive investments in artificial intelligence while seeking to streamline operations and contain rising costs.
The layoffs, announced on Monday, mark the latest round of job reductions across the technology sector as companies race to monetize AI after committing hundreds of billions of dollars to new infrastructure and software.
The workforce reduction comes after Microsoft’s shares fell nearly 23% during the first half of 2026, their weakest first-half performance since 2022, despite continued demand for its AI-powered cloud services.
Microsoft has emerged as one of the biggest investors in generative AI, committing billions of dollars to expand data centers and strengthen its Azure cloud platform.
The company projected capital spending of about $190 billion for 2026, far exceeding analysts’ expectations, as it expands infrastructure to support growing AI demand.
Earlier this year, Microsoft also offered voluntary buyouts to nearly 9,000 U.S.-based employees, representing about 7% of its domestic workforce. The company has traditionally adjusted staffing levels near the close of its fiscal year in June as it prepares budgets for the next financial year.
Although Azure continues to benefit from strong enterprise demand for AI services, the enormous cost of building and operating AI infrastructure has increased pressure on Microsoft’s cash flow.
The software maker is scheduled to report quarterly earnings later this month.
People familiar with the restructuring said the cuts primarily affected Microsoft’s commercial sales organization and its Xbox gaming division.
The reductions reflect broader changes in how the company expects AI tools to automate routine business functions, including customer support, sales operations and administrative tasks.
Industry analysts say AI-powered software is increasingly capable of generating sales proposals, handling customer inquiries and assisting account management, reducing reliance on traditional sales teams.
Meanwhile, Microsoft’s gaming business continues to face mounting financial pressure despite its acquisition of Activision Blizzard.
Earlier this year, the company raised Xbox console prices after higher memory chip costs increased hardware expenses, even as consumer demand remained subdued.
Last month, Xbox President Asha Sharma acknowledged the need for significant operational changes, telling employees the gaming division required a “reset” after profitability weakened.
She said Microsoft’s gaming business, excluding Activision Blizzard King, had invested more than $20 billion over the past five years in content, platforms and hardware subsidies while annual revenue declined by nearly $500 million.
“Going forward, this cannot continue,” Sharma said in an internal memo published by the company.
Microsoft is also evaluating strategic options for its gaming operations, including restructuring the Xbox division or separating it into a wholly owned subsidiary, according to a report by The Information last month.
Microsoft’s latest job cuts underscore a broader shift across the technology industry as companies seek to balance soaring AI investment with pressure from investors to improve profitability.
Major technology firms are expected to spend more than $700 billion on AI initiatives this year, prompting executives to identify efficiencies that can offset those costs.
Amazon and Meta Platforms have also announced thousands of job cuts in 2026 as they continue expanding AI capabilities while reducing spending in other parts of their businesses.
Although Microsoft is eliminating thousands of positions, the company continues hiring in areas such as AI research, machine learning and cloud infrastructure, reflecting a broader transformation rather than an overall contraction.
The restructuring illustrates how large technology companies are increasingly redirecting resources toward AI-driven businesses while reducing roles that can be automated or consolidated.
For investors, the strategy could improve operating margins over time. However, for employees across the technology industry, Microsoft’s latest move highlights how artificial intelligence is rapidly reshaping workforce requirements and accelerating structural changes across the sector.
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