Microsoft cuts 4,800 jobs as AI spending pressures costs
Latest round of layoffs affects about 2.1 per cent of the workforce as the tech giant ramps up investment in artificial intelligence and data centre infrastructure
Microsoft has announced another round of layoffs, cutting around 4,800 jobs globally as the technology giant continues to pour money into artificial intelligence while trying to rein in costs.
The latest reduction amounts to about 2.1 per cent of Microsoft’s global workforce and comes as large technology companies grapple with the rising financial burden of building AI infrastructure. Firms such as Amazon and Meta have also trimmed headcount this year as spending on data centres and computing capacity accelerates.
The move follows a difficult first half of the year for Microsoft, whose shares fell nearly 23 per cent in the first six months of 2026, their weakest first-half performance since 2022. Earlier this year, the company had also offered voluntary buyouts to nearly 9,000 employees in the US, equivalent to around 7 per cent of its domestic workforce.
Microsoft has traditionally made workforce changes around the end of its fiscal year in June, when it reviews budgets and spending plans for the next financial year.
The company’s Azure cloud business has continued to benefit from strong demand for AI services, but that growth has come with rising costs as Microsoft expands its data centre footprint. Until April, Azure was the exclusive cloud provider for OpenAI models, helping drive demand for Microsoft’s cloud offerings.
Even so, the scale of investment needed to support AI services has added pressure on cash flows. Microsoft said in April that it expected capital expenditure of $190 billion in 2026, far above analyst estimates, as it continues to build out infrastructure to support AI demand.
The rapid adoption of AI is also reshaping parts of Microsoft’s traditional software business by automating routine tasks, while higher memory chip prices driven by demand from AI data centres have added to production costs. The company has also raised prices for Xbox consoles at a time when demand for gaming hardware has remained muted.
Microsoft is due to report its latest financial results later this month, when investors are expected to look closely at whether strong Azure growth can offset the mounting cost of its AI push.
With IANS inputs