An article summarized by CNBC:
Microsoft is cutting approximately 4,800 jobs, or about 2.1% of its global workforce, as part of a broader cost-cutting and restructuring effort during the rapid rise of artificial intelligence. The company's Xbox division will be hit particularly hard, with around 3,200 positions being eliminated through fiscal year 2027, roughly 20% of the gaming division's workforce, including 1,600 layoffs taking effect immediately. Microsoft executives said the restructuring is intended to streamline operations and position the company for future growth, with Xbox aiming to return to growth in 2027.
The layoffs come as Microsoft faces increasing pressure from investors over its AI strategy and slowing performance in parts of its business. While its cloud computing and LinkedIn divisions have continued to grow, revenue has weakened in areas including Windows licenses, Surface devices, and Xbox. Microsoft's stock has fallen about 19% in 2026, making it the weakest-performing megacap technology stock this year, as investors question whether the company can successfully compete in the rapidly evolving AI market. As part of the restructuring, Microsoft is also spinning off or selling several gaming studios, including Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs.
Company executives emphasized that the layoffs are not simply the result of AI replacing workers but acknowledged that artificial intelligence is fundamentally changing how work is performed. Chief People Officer Amy Coleman said AI is automating some everyday tasks, requiring employees to continually develop new skills as the workplace evolves. Microsoft has also introduced voluntary retirement programs and said it will continue exploring ways to reduce future layoffs, while maintaining that adapting to AI-driven changes is essential for both the company and its customers.
