Microsoft lays off 4,800 as AI investments reshape business

Microsoft layoffs see nearly 2.1 percent jobs cut as the company restructures its Xbox and commercial business to prioritise artificial intelligence investments.

Microsoft has announced it will cut 2.1 per cent of its workforce, or nearly 4,800 jobs, as the company plans to restructure its Xbox and commercial business, joining a long list of tech companies in layoffs while shifting investments towards artificial intelligence (AI).

In the early trading session on Monday, Microsoft’s shares plunged 1.5 per cent, Reuters reported. In a memo to employees, the Chief People Officer, Amy Coleman, said AI was changing how work gets done by automating ⁠some routine tasks, adding that the layoffs were part of a broader effort to realign resources.

“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,” Coleman added, Reuters reported.

The development comes after shares of Microsoft witnessed a 23 per cent decline in the first six months of 2026, the worst performance by the Windows maker since 2022.

Earlier this year, Microsoft offered voluntary buyout to about 7 per cent, or 9,000 employees of its workforce in the United States. The software company, however, often cuts jobs at the end of its financial year in June while setting spending plans for the upcoming year, Reuters reported.

Big tech companies’ expenditure on AI is reportedly set to cross $700 billion this year as pressure mounts on firms to show returns from technology and cover the rising cost of rolling it out across their businesses. Amazon and Meta also announced thousands of layoffs in their companies this year.

Xbox CEO Asha Sharma had said last month that business needs a “reset” and the profit margin has declined to 3 per cent, which could mean that a forced restructuring would be required, including a potential merger and acquisition.

“Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, ⁠platform and ​hardware subsidy, but our annual revenue has declined nearly half a billion during ​that time,” Sharma had said in a memo published on Microsoft’s website.

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Microsoft has announced it will cut 2.1 per cent of its workforce, or nearly 4,800 jobs, as the company plans to restructure its Xbox and commercial business, joining a long list of tech companies in layoffs while shifting investments towards artificial intelligence (AI).

In the early trading session on Monday, Microsoft’s shares plunged 1.5 per cent, Reuters reported. In a memo to employees, the Chief People Officer, Amy Coleman, said AI was changing how work gets done by automating ⁠some routine tasks, adding that the layoffs were part of a broader effort to realign resources.

“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,” Coleman added, Reuters reported.

The development comes after shares of Microsoft witnessed a 23 per cent decline in the first six months of 2026, the worst performance by the Windows maker since 2022.

Earlier this year, Microsoft offered voluntary buyout to about 7 per cent, or 9,000 employees of its workforce in the United States. The software company, however, often cuts jobs at the end of its financial year in June while setting spending plans for the upcoming year, Reuters reported.

Big tech companies’ expenditure on AI is reportedly set to cross $700 billion this year as pressure mounts on firms to show returns from technology and cover the rising cost of rolling it out across their businesses. Amazon and Meta also announced thousands of layoffs in their companies this year.

Xbox CEO Asha Sharma had said last month that business needs a “reset” and the profit margin has declined to 3 per cent, which could mean that a forced restructuring would be required, including a potential merger and acquisition.

“Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, ⁠platform and ​hardware subsidy, but our annual revenue has declined nearly half a billion during ​that time,” Sharma had said in a memo published on Microsoft’s website.