Microsoft has announced widespread layoffs: what’s happening
7 July 05:51
The American corporation Microsoft has announced that it will lay off approximately 4,800 employees, representing about 2.1% of the company’s total workforce. The decision is linked to the rapid rise in costs associated with developing artificial intelligence infrastructure and the need to improve business efficiency. This was reported by Reuters, according to "Komersant Ukrainian".
Why Microsoft Is Laying Off Employees
According to Reuters, the world’s largest technology companies plan to spend more than $700 billion on artificial intelligence development this year.
Due to these record investments, companies are facing the need to demonstrate profitability from new technologies and offset the enormous costs.
Microsoft has become yet another company, following Amazon and Meta, to undertake a large-scale workforce reduction.
Microsoft’s stock is experiencing its worst half-year in several years
The first six months of 2026 proved to be challenging for the company.
During this period, Microsoft’s stock lost nearly 23% of its value, marking its worst first half-year performance since 2022.
In addition, earlier this year, the company had already offered voluntary separation packages to approximately 7% of its U.S. employees (nearly 9,000 people).
Azure’s growth requires massive investments
Despite the rapid growth in demand for Microsoft Azure cloud services, the company is forced to spend increasingly more on building new data centers.
In April, Microsoft reported that capital expenditures in 2026 could reach $190 billion, significantly exceeding analysts’ forecasts.
It is precisely these large-scale investments in AI infrastructure that have become one of the main factors contributing to the financial burden.
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Automation Is Transforming Microsoft’s Business
The company also acknowledges that AI tools are increasingly automating routine tasks.
On the one hand, this helps customers increase productivity; on the other, it creates new challenges for Microsoft’s traditional software business.
Additional pressure has come from rising prices for memory chips—which are essential for modern data centers—forcing the company to even raise prices on Xbox gaming consoles.
Xbox May Face Major Restructuring
Some changes may also occur within the Xbox division.
The new head of the gaming business, Asha Sharma, announced the need to reboot the division after its operating margin fell to 3%.
According to her, over the past five years, Microsoft has invested more than $20 billion in Xbox development, content, and the platform, while the division’s annual revenue during that period has declined by nearly $500 million.
The company is considering several options for the future of its gaming business, including:
- restructuring the division;
- creating a separate subsidiary;
- potential mergers or acquisitions.
Microsoft Continues to Invest in Artificial Intelligence
Despite staff reductions, Microsoft is not backing away from large-scale investments in artificial intelligence.
The company previously announced the creation of a new division, Microsoft Frontier Company, which will help corporate clients implement AI-based solutions and evaluate their cost-effectiveness.
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