Microsoft has announced it will lay off approximately 6,000 employees, which equates to less than 3% of its global workforce, as part of efforts to manage expenses while significantly increasing investments in artificial intelligence. The layoffs span various roles and regions and mark the largest reduction since the company cut 10,000 jobs in 2023. Unlike a smaller round of performance-related layoffs in January, this move is tied to broader organizational adjustments. Microsoft aims to reallocate resources to focus on AI and cloud computing, with a spokesperson stating the changes are necessary to remain competitive in a fast-changing market.
The decision comes despite Microsoft’s strong quarterly performance, driven by growth in its Azure cloud business. However, rising costs from AI infrastructure have put pressure on profit margins. Microsoft Cloud’s margin fell to 69% in the March quarter, down from 72% the previous year. The company plans to spend $80 billion this fiscal year, largely to expand data center capacity for AI services. D.A. Davidson Analyst Gil Luria said, “We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures." As AI becomes a central focus, Microsoft is reshaping its workforce and operations to sustain long-term profitability.
