Microsoft plans more layoffs as it boosts spending on AI and data centers

In short: Microsoft is preparing another round of layoffs affecting thousands of workers while it continues to spend very large sums on AI and cloud computing.

What's going on

Recent reporting says Microsoft is planning a new set of job cuts that could affect thousands of employees. The reports suggest the total would be under 2.5% of Microsoft’s global workforce of roughly 220,000 to 228,000 people, which would likely mean fewer than about 5,500 roles. The timing is not confirmed, but some reports said an announcement could come soon.

This would be at least the third major round of layoffs in just over a year. Microsoft announced about 6,000 job cuts in May 2025, and up to 9,000 more in July 2025. The company also cut 10,000 jobs in January 2023, followed by more reductions in later years.

The newest cuts are expected to hit sales and consulting teams, and parts of the Xbox gaming business. Some employees may be offered different jobs elsewhere inside Microsoft, based on reporting that cites internal sources.

At the same time, Microsoft executives have told investors that overall headcount is expected to keep declining. They have also said the company is spending heavily on AI and cloud infrastructure. That includes data centers (large buildings full of computers, like warehouses for computing power) and specialized chips used for AI.

What to watch

Investors and employees will be watching how far Microsoft takes these reductions, and whether the company keeps shifting money from staffing into data centers and AI hardware. Another key question is which groups keep shrinking, and which AI-focused teams keep growing.

Source: NYTimes