Microsoft will lay off nearly 4% of its workforce, the company announced Wednesday, marking the latest round of job cuts as the tech giant works to control costs while making significant investments in artificial intelligence infrastructure.
As of June 2024, Microsoft employed roughly 228,000 people worldwide. The company had previously announced in May that it was cutting around 6,000 jobs. Last month, Bloomberg News reported that Microsoft was planning to eliminate thousands of roles, particularly in its sales organization.
The Windows maker has committed $80 billion in capital spending for fiscal year 2025. But the rising cost of building out its AI infrastructure is starting to pressure margins. Microsoft expects its June-quarter cloud margins to decline compared to the previous year.
On Wednesday, the company said it will “reduce organizational layers with fewer managers and streamline its products, procedures and roles.”
The Seattle Times was first to report the layoffs earlier in the day. Separately, Bloomberg reported that Microsoft’s King division in Barcelona, known for developing Candy Crush, is cutting 10% of its staff, or about 200 jobs.
Microsoft confirmed to Reuters that its gaming division was affected by the layoffs, though not the majority of the unit. It did not offer additional details.
Other Big Tech players that are also pouring resources into AI have implemented similar workforce reductions.
Facebook parent Meta said earlier this year it would trim around 5% of its “lowest performers,” while Alphabet’s Google has cut hundreds of roles over the past year.
Amazon, too, has made cuts across various business units, most recently within its books division. Earlier layoffs affected its devices and services unit, as well as its communications team.
Economic headwinds and mounting operational costs have fueled layoffs across corporate America, as companies move swiftly to streamline and insulate themselves from further financial pressure.
Despite the recent layoffs, Microsoft’s stock hit a record high of $497.45 per share on June 26, reflecting strong investor confidence ahead of the announcement and signaling continued optimism about the company’s long-term strategy and growth potential.
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