Microsoft has commenced a fresh round of layoffs that will impact approximately 9,000 employees—less than 4% of its global workforce—as part of its broader effort to streamline operations and realign priorities around artificial intelligence. This marks the second major round of layoffs in 2025 and is consistent with the company’s tradition of organizational restructuring at the beginning of its fiscal year.
The job cuts, which span across departments, geographies, and experience levels, are aimed at reducing management layers and increasing operational agility. According to a company spokesperson, the decision is in response to the need to “position the company and teams for success in a dynamic marketplace.”
This move follows earlier layoffs in May and June, which saw more than 6,000 jobs eliminated, primarily in product and engineering roles. With this latest wave, Microsoft continues its pivot toward a leaner, more efficient structure better suited to the demands of the fast-evolving AI landscape.
Phil Spencer, CEO of Microsoft Gaming, noted that the changes will also affect divisions like Xbox, stating, “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.”
The timing of the layoffs coincides with Microsoft’s aggressive investment in AI infrastructure and applications. The company has spent tens of billions of dollars in recent quarters building out data centers, developing AI applications, and integrating AI capabilities across its product portfolio, including Azure and Microsoft 365. Analysts say that trimming headcount may help offset some of the escalating costs tied to AI deployment.
Anurag Rana, an analyst at Bloomberg Intelligence, suggested that the move may also indicate Microsoft’s internal shift toward greater use of AI tools for tasks previously handled by larger teams. “The reductions could help offset rising spending associated with the AI infrastructure build-out,” Rana noted.
Despite these cuts, Microsoft remains financially robust. The company recently reported $70 billion in revenue and nearly $26 billion in net income for the March quarter, surpassing Wall Street expectations. Its stock also reached a record high of $497.45 in late June, demonstrating continued investor confidence.
While Microsoft is not alone in reducing headcount—other software firms like Autodesk, Chegg, and CrowdStrike have announced layoffs this year—the tech giant’s latest restructuring underscores a broader trend in the industry: optimizing human capital while doubling down on AI.
As the company enters its 2026 fiscal year, the cuts reflect more than just cost management—they signal a strategic recalibration. By consolidating teams and enhancing focus on core growth areas, Microsoft aims to maintain its leadership in AI while navigating the pressures of an increasingly competitive and capital-intensive tech environment.
