Microsoft Announces 4,800 Job Cuts As It Doubles Down On AI Investments

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Key points generated by AI, verified by newsroom

• Microsoft is laying off 4,800 employees, 2.1% of its workforce.
• Layoffs restructure commercial and Xbox divisions for AI investments.

Microsoft is set to lay off around 4,800 employees, or about 2.1 per cent of its global workforce, as the technology giant restructures parts of its commercial and Xbox divisions while continuing to ramp up investments in artificial intelligence (AI).

The company’s shares fell around 1.5 per cent in early trading following the announcement.

The move comes as major technology firms face mounting pressure to justify massive AI spending. Industry-wide investment in AI infrastructure is expected to exceed USD 700 billion this year, prompting companies to streamline operations and redirect resources. Firms including Amazon and Meta have also announced thousands of job cuts in 2026, Reuters reported.

AI Not Replacing Eliminated Roles: Microsoft

In a memo to employees, Microsoft’s Chief People Officer Amy Coleman said the company is reshaping its workforce to better align with strategic priorities.

While acknowledging that AI is transforming the way employees work by automating certain routine tasks, Coleman stressed that the latest layoffs are not a direct result of AI replacing workers.

“I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done,” she wrote.

Part Of Broader Cost-Realignment

The layoffs come after Microsoft’s stock declined nearly 23 per cent during the first half of 2026, marking its weakest first-half performance since 2022.

Earlier this year, the software giant also offered voluntary buyouts to around 9,000 US employees, representing roughly 7 per cent of its domestic workforce.

Microsoft typically reviews its workforce and operating costs at the close of its fiscal year in June as it prepares spending plans for the next financial year. The latest job cuts form part of that broader restructuring exercise while the company continues to prioritise AI-led growth.