After 6,000 in May, Microsoft to Cut 9,000 Jobs in Latest Round, Says AI is Priority

Microsoft Corp announced on Wednesday it will lay off approximately 9,000 employees, representing less than 4% of its global workforce, as part of a strategic restructuring to prioritize investments in artificial intelligence (AI) and cloud computing, the company said. 

In a blogpost in the Microsoft network, CEO Satya Nadella said, “To deliver on our mission, we need to stay focused on our three business priorities: security, quality, and AI transformation. We are doubling down on the fundamentals while continuing to define new frontiers in AI. Security and quality are non-negotiable. Our infrastructure and services are mission critical for the world, and without them we don’t have permission to move forward.”

The layoffs, which began on July 2, mark the company's second significant workforce reduction this year, following a cut of about 6,000 jobs in May. The latest move affects various divisions, including the Xbox gaming unit, sales teams, and other segments across multiple geographies, a spokesperson confirmed.

The company employed 228,000 people as of June 2024. “We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” the spokesperson said in a statement, declining to provide further details on the specific roles or regions impacted. The cuts come as Microsoft intensifies its focus on AI and cloud services, with significant investments in data centres and infrastructure to support its Azure platform and AI tools like GitHub Copilot, which now boasts over 15 million users.

Analysts suggest the layoffs target slower-growing areas, such as the Xbox division, to streamline operations and reduce management layers. Wedbush Securities analyst Dan Ives noted that Microsoft is “focused more and more on AI, cloud, and next-generation technologies, looking to cut costs around Xbox and legacy areas.” The company’s recent $75.4 billion acquisition of Activision Blizzard in 2023 has also prompted restructuring within its gaming division, with 830 job cuts reported in Washington state alone, including roles like game designers and cloud solution architects.

Gaming as Strategic Growth Area

“To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness,” Phil Spencer, Microsoft’s CEO of gaming, wrote in a Wednesday memo to employees in that division.

Microsoft’s stock dipped 0.2% on the day of the announcement but remains up 16% year-to-date, reflecting investor confidence in its AI-driven strategy. The company reported $25.8 billion in quarterly net income in April, exceeding Wall Street expectations, and its market valuation stands at nearly $3.7 trillion. The layoffs follow a broader trend in the tech sector, with companies like Autodesk, Chegg, and CrowdStrike also trimming staff in 2025 amid economic uncertainty.

Microsoft’s chief financial officer, Amy Hood, emphasized in April a focus on “building high-performing teams and increasing agility by reducing layers with fewer managers.”

Microsoft’s CEO, Satya Nadella, has not publicly commented on the layoffs. The company said it remains committed to supporting affected employees through severance packages and career transition services.