Microsoft joins AI-driven tech layoff wave with 4,800 job cuts

July 6 (Reuters) - Microsoft is cutting astir 2.1% of its workforce, oregon astir 4,800 jobs, the latest successful a question of tech layoffs arsenic the Windows shaper spends heavy ‌on AI infrastructure and uses the exertion to amended ratio crossed its business.

Big Tech's ‌historic AI outlays, acceptable to apical $700 cardinal this year, are piling unit connected companies to amusement returns from the exertion and ​offset the rising outgo of rolling it retired crossed their businesses. Amazon and Meta Platforms person besides laid disconnected thousands of employees this year.

Microsoft announced the cuts connected Monday pursuing a unsmooth stretch, with its shares falling astir 23% successful the archetypal six months of 2026, their worst first-half show since 2022.

The bundle ‌giant earlier this twelvemonth offered voluntary ⁠buyouts to astir 7% of its U.S. workforce, oregon astir 9,000 employees. Microsoft often trims jobs adjacent the extremity of its fiscal twelvemonth successful June arsenic ⁠it sets spending plans for the caller year.

Booming AI request has powered maturation astatine Microsoft's Azure cloud-computing business, which was the exclusive seller of OpenAI's models until April, but the mounting outgo of gathering information centers ​to tally ​those services is squeezing its currency flows.

The company, ​expected to study results aboriginal this month, ‌had successful April forecast quarterly Azure income supra Wall Street estimates, but besides issued a $190 cardinal spending projection for 2026 that massively surpassed expectations.

AI tools that tin progressively automate regular concern tasks person besides emerged arsenic a menace to its lucrative bundle business, portion a surge successful representation spot prices driven by information halfway request has forced Microsoft to rise Xbox console prices astatine a clip erstwhile request ‌for the console was already soft.

The gaming division's caller head, ​Asha Sharma, said past period the concern needed a "reset" and ​that its nett borderline had declined to ​3%, forcing a restructuring that could see imaginable M&A.

"Excluding Activision Blizzard King, implicit ‌the past 5 years, we person spent ​over $20 cardinal connected ongoing investments ​in our content, level and hardware subsidy, but our yearly gross has declined astir fractional a cardinal during that time," she said successful an outspoken memo to employees published connected ​Microsoft's website. "Going forward, this cannot continue."

The ‌company is considering options for the Xbox gaming unit, including a imaginable spinoff oregon ​restructuring arsenic a wholly owned subsidiary, the Information reported past month.

(Reporting by Aditya Soni ​in Bengaluru; Editing by Tasim Zahid and Leroy Leo)