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Microsoft is laying off approximately 6,000 employees, just under 3% of its global workforce, as part of an effort to rebalance operations and control costs while accelerating its multi-billion-dollar investment in artificial intelligence infrastructure.
The layoffs, which will impact roles across departments and regions, mark one of the company’s largest workforce reductions since 2023, when it cut 10,000 jobs. These new cuts are unrelated to smaller, performance-based terminations that took place earlier this year, according to reports by CNBC and others.
This development comes despite recent strong performance in Microsoft’s cloud computing division, Azure, which exceeded expectations in its latest earnings report. However, even as revenues climb, Microsoft is under pressure to manage shrinking profit margins—particularly within its cloud segment, where margins dropped from 72% to 69% year-over-year in the March quarter, According to Reuters.
At the heart of the restructuring is Microsoft’s aggressive push into artificial intelligence. The company has committed a staggering $80 billion in capital expenditures for the current fiscal year, with the bulk allocated to expanding data center capacity for AI workloads. This includes infrastructure to support large-scale generative AI models and services offered through Microsoft Azure and integrated into products like Office and Copilot.
With AI seen as a critical driver of future growth, Microsoft and other tech giants are making strategic decisions to optimize resource allocation. Alphabet, the parent company of Google, has also implemented layoffs in recent months to fund its own AI ambitions.
While Microsoft has a long history of adjusting personnel to support shifting priorities, analysts note that this latest move reflects a more calculated response to rising costs associated with AI infrastructure. Increased capital spending results in higher depreciation expenses, and staffing adjustments are one way to offset those financial pressures.
Despite the cuts, Microsoft’s forward momentum in AI remains clear. The company is betting that near-term sacrifices will lead to long-term leadership in one of the most transformative technology shifts of the decade.
