Microsoft Cuts 6,000 Jobs Amid AI Investment Push

Microsoft slashes 6,000 positions globally amid AI spending spree

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? It's another bad day to be a tech worker. Microsoft has announced that it is laying off 6,000 employees, around three percent of its entire workforce, globally. It brings the total number of tech industry layoffs in 2025 to almost 60,000 - and there's still more than half the year left. Microsoft said that is slashing three percent of its workforce across all levels, teams and geographies. The company employed around 228,000 workers as of the end of June, meaning about 6,000 people will be losing their jobs. Of that number, 1,985 layoffs will be tied to Microsoft's Redmond headquarters, including 1,510 in-office. While the cuts are affecting those at all levels, including at LinkedIn and international offices, the expected focus will be on reducing the number of management positions. In April, Microsoft Chief Financial Officer Amy Hood said on an earnings call that the company would be streamlining by "reducing layers with fewer managers." It was reported at the time that some Microsoft organizations were looking to increase their span of control, defined as the number of direct reports or subordinates a manager or supervisor oversees. The company also wanted to increase the number of coders compared to non-coders on projects. Regarding the latest round of layoffs, a Microsoft spokesperson said, "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace." The move comes despite Microsoft beating expectations in its latest quarterly earnings report. The company made $70.1 billion in revenue for the quarter, up 13% from the same period last year, and it continues to invest billions of dollars in AI. The Windows maker has designated $80 billion in capital spending this fiscal year, with most of it aimed at expanding data centers for its artificial intelligence services. At the start of the year, Microsoft confirmed it was implementing performance-based layoffs, though it said those let go would be replaced with new hires. Soon after those performance cuts were revealed, the company said it was making more job cuts across its business, impacting employees in the gaming, experience & devices, sales, and security divisions. The company also tightened policies for low performers in April and added a voluntary exit plan. The latest round of cuts will be the largest since Microsoft laid off 10,000 people just over two years ago. Adding those to the 1,900 people let go after the Activision Blizzard deal closed, the Azure layoffs, the game studio cuts, and the others mentioned here brings the total to around 21,550 Microsoft layoffs since the start of 2023.

Microsoft slashes 6,000 jobs worldwide in strategic shift toward AI

"We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace," a Microsoft spokesperson said. Last month at an AI event, CEO Satya Nadella told Meta boss Mark Zuckerberg that "maybe 20, 30% of the code" for some of Microsoft's coding projects "are probably all written by software." The restructuring comes as the company pours $80 billion this fiscal year into building data centers and infrastructure to support its rapidly expanding AI ambitions -- technology it says is already reshaping how work gets done across its own teams. Zhao, however, said that cutting roles doesn't necessarily mean it's driven by AI. "When these big tech companies say that they're trimming management layers, that doesn't really sound like it's being driven by AI," he explained. "You're not expecting ChatGPT to replace the manager." Microsoft's move is part of a broader wave of layoffs rippling through the tech industry in 2025. Meta recently announced plans to cut around 3,600 jobs, Amazon continues to trim teams tied to communications and sustainability, and Salesforce is letting go of over 1,000 workers even as it hires for AI roles.

Microsoft slashes 6,000 jobs as it clears the way for AI investments

Microsoft starts laying off thousands of workers as the company spends heavily on artificial intelligence. Microsoft started laying off about 6,000 workers on Tuesday, nearly 3% of its entire workforce, marking its largest job cuts in more than two years. The tech giant's home state of Washington was hard hit, where Microsoft informed state officials it was cutting 1,985 workers tied to its Redmond headquarters, many of them in software engineering and product management roles. Microsoft said the layoffs will be across all levels, teams and geographies, but the cuts will focus on reducing the number of managers. Notices to employees began going out on Tuesday. The mass layoffs come just weeks after Microsoft reported strong sales and profits that beat Wall Street expectations for the January-March quarter, which investors took as a dose of relief during a turbulent time for the tech sector and US economy. "I think many people have this conception of layoffs as something that struggling companies have to do to save themselves, which is one reason for layoffs, but it's not the only reason," said Daniel Zhao, lead economist at workplace reviews site Glassdoor. "Big tech companies have trimmed their workforces as they rearrange their strategies and pull back from the more aggressive hiring that they did during the early post-pandemic years." Microsoft employed 228,000 full-time workers as of last June, the last time it reported its annual headcount. About 55% of those workers were in the US. Microsoft announced a smaller round of performance-based layoffs in January. However, the 3% cuts will be Microsoft's biggest since early 2023, when the company cut 10,000 workers, almost 5% of its workforce, joining other tech companies that were scaling back their pandemic-era expansions. Microsoft's chief financial officer, Amy Hood, said on an April earnings call that the company was focused on "building high-performing teams and increasing our agility by reducing layers with fewer managers." She also said the headcount in March was 2% higher than a year earlier, and down slightly compared to the end of last year. The layoffs are hitting all parts of Microsoft's business, including the video game platform Xbox and the career networking site LinkedIn. Some laid-off workers and the executives who made the cuts took to LinkedIn to talk about them. "This is the first time I've had to lay people off to support business goals that aren't my own," wrote Scott Hanselman, a vice president of Microsoft's developer community. "I often have trouble separating my beliefs with the system that I participate in and am complicit in. These are people with dreams and rent and I love them and I want them to be OK." He added: "This is a day with a lot of tears." The company didn't give a specific reason for the layoffs, only that they were part of "organisational changes necessary to best position the company for success in a dynamic marketplace." Microsoft has said it has been spending $80 billion (€71.4bn) in the fiscal year that ends in June on building data centres and other infrastructure it needs to develop its artificial intelligence technology, though it has also scaled back some of those projects. Those AI tools have been pitched as changing the way people work, including in Microsoft's own workplaces. Microsoft CEO Satya Nadella told Meta CEO Mark Zuckerberg at an AI event last month at Meta's headquarters that "maybe 20-30% of the code" for some of Microsoft's coding projects "are probably all written by software." Even if AI is increasingly helping Microsoft software engineers, that doesn't necessarily mean it's the chief reason for laying them off. "When these big tech companies say that they're trimming management layers, that doesn't really sound like it's being driven by AI," Zhao said. "You're not expecting ChatGPT to replace the manager." Instead, cutting management ranks can often reflect a broader strategy. "As companies grow quickly, you need to add managers who can coordinate across teams or within teams," Zhao said. "But it's not until things start to slow down that people start asking questions about how necessary those roles are." Of the laid-off employees in Washington, about 1,500 worked in person at Microsoft's offices and 475 worked remotely, according to the notice the company sent to the state employment agency. Their official last day will be in July. After hiring sprees that started when the COVID-19 pandemic spiked demand for online services, many tech companies are still in the process of "coming back to Earth and trying to kind of rebalance some things," said Cory Stahle, an economist at Indeed, the job listings website. And while Microsoft isn't as directly affected by President Donald Trump's wide-ranging tariffs as some of its peers, it must also think more broadly about economic conditions that could play out over the coming months and years. "This could be an effort to think more long-term," Stahle said. "If you have to go out and buy groceries and spend more on groceries and produce that are more expensive due to tariffs, you may not have as much discretionary income to spend on electronics or video game systems."

Microsoft Lays Off AI Director and TypeScript Veteran in Latest Job Cuts | AIM

The layoffs come despite Microsoft reporting $25.8 billion in quarterly net income and providing an upbeat forecast in late April. Microsoft has laid off around 6,000 employees -- roughly 3% of its global workforce -- as part of ongoing organisational restructuring. The cuts affect roles across levels, teams and geographies, including high-profile figures such as Gabriela de Queiroz (director of AI), Microsoft for startups and Ron Buckton, a senior software engineer who spent nearly a decade working on TypeScript. "We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace," a Microsoft spokesperson said in a statement to CNBC. De Queiroz confirmed her departure on LinkedIn, writing, "I was impacted by Microsoft's latest round of layoffs." She added, "No matter how hard you work, how much you advocate for your company, or how much results and visibility you bring... none of that makes you immune to restructuring." De Queiroz said she stayed on briefly after the layoff announcement to attend meetings and wrap up work. "That felt right to me," she said. "To those also affected -- you're not alone. We are at least 6,000." Buckton also shared his departure, saying, "After 18 years at Microsoft, with roughly a decade of that time working on TypeScript, I have unfortunately been let go in the latest round of layoffs." He plans to take a few days off before beginning the job search. The layoffs come despite Microsoft reporting $25.8 billion in quarterly net income and providing an upbeat forecast in late April. According to state filings, 1,985 of the affected roles were tied to the Redmond headquarters, with 1,510 based in the office. Microsoft had 228,000 employees worldwide as of the end of June.

Why is Microsoft, the world's most valuable company, cutting workers?

Microsoft is laying off more than 6,000 employees in an effort to streamline its corporate ranks. The Redmond-based software giant said Tuesday that the layoffs, which will affect almost 2,000 workers in Washington state, are meant in part to strip away layers of management and create more nimble teams. Sound familiar? Microsoft isn't alone in this strategy. It's the same reasoning Starbucks CEO Brian Niccol gave when Starbucks laid off more than 1,000 corporate workers and removed hundreds of open roles. Amazon CEO Andy Jassy said last year that the company was working to lower the manager-to-employee ratio. Tuesday's layoffs were the largest at Microsoft since January 2023, when the company started culling its ranks by 10,000 through the following few months. But the tech sector was in a different position then; the decade leading up to the pandemic saw furious growth, with employment skyrocketing from 2020 through 2022, before stalling in late 2022. In Washington state alone, software publishing jobs grew from about 55,200 in March 2015 to a peak of 88,400 in March 2023, according to Anneliese Vance-Sherman, a chief economist with the state Employment Security Department. That's not even the full scope of the tech sector, as employees at tech companies like Amazon can be classified as retail or professional business services workers. Tech job growth stalls Since March 2023, employment in software publishing has remained relatively flat outside of a small rebound or dip here and there. "We saw remarkable, sustained growth until that peak in 2023," Vance-Sherman said. "The pandemic is really relevant when we're talking about high-tech industries. We were sending workers home, changing the way we shop and live and we adopted a lot of information technology at an accelerated rate." The near-plateau in the data, to Vance-Sherman, shows maturity in the job market cycle. Fewer jobs are opening as fewer people and companies race to adopt new technology. Tech companies like Microsoft, Amazon and Meta, all of which laid of tens of thousands of employees in late 2022 through 2023, framed the workforce reductions as righting the ship. Some had over-hired during the pandemic and rising costs colored earnings reports, upsetting Wall Street. The market is different for Microsoft in 2025, despite the Trump administration's topsy-turvy trade policies. Stock prices for all tech companies suffered after the president's April 2 announcement of sweeping tariffs. Microsoft was hit the least, however, especially compared with companies like Amazon and Apple that rely on imported goods. Microsoft also took over the title of world's most valuable company from Apple not long after the announcement. A stock surge gave Apple the lead back. But on May 2, Microsoft regained the crown and has held on since, with a market capitalization of $3.34 trillion as of Tuesday. During the latest round of quarterly earnings in late April, with tariff turmoil looming over financial results, Microsoft posted results that exceeded Wall Street expectations. For the first three months of 2025, the company reported more than $70 billion, with $25.8 billion in profit. Microsoft also predicted strong results for April through June, projecting more than $73 billion in revenue. But the company is pumping billions of those dollars into artificial intelligence infrastructure, namely data centers, that won't make a return on investment in the immediate future. Microsoft plans to spend more than $80 billion in capital expenditures -- costs attributed to investments, not daily operations -- on AI infrastructure during its 2025 fiscal year, which ends June 30. AI costs rise Jean Atelsek, a senior research analyst for S&P Global Market Intelligence, said the connection between a heavier investment in AI and layoffs isn't as simple as workers being replaced by automation. It's more likely companies are cutting costs to justify the dollars pumped into AI. "I think there is some justification in removing layers of management," said Atelsek, who covers cloud computing companies for S&P Global's tech group 451 Research. "But I also think they are cutting costs like crazy to keep their margins intact in light of rapidly growing capital spending." She also wouldn't discount Microsoft's reason for the layoffs, namely creating more agile teams and restructuring the balance of managers to developers in favor of more of the latter. "People are talking about the AI transition as being as significant as the server to cloud transition," Atelsek said. "So realigning teams for that seems like a justified reason." Microsoft Chief Financial Officer Amy Hood hinted at the restructuring during the company's earnings call April 30. When addressing the company's margins, Hood said Microsoft was focused on "building high-performing teams and increasing our agility by reducing layers with fewer managers." The company's total head count was 2% higher at the end of March than a year previous, but slightly down from the end of December. As of Tuesday evening, Microsoft hasn't officially announced layoffs to employees. In 2023, CEO Satya Nadella announced cuts in a Microsoft blog and a memo sent companywide. The layoffs aren't focused in any single organization or geographic location. Cuts hit Microsoft subsidiaries LinkedIn and GitHub as well. GitHub CEO Thomas Dohmke addressed employees Tuesday and said he'll host an "ask me anything" session on Thursday, according to internal communications viewed by The Seattle Times. "Earlier today, we said goodbye to a number of Hubbers," he wrote, referring to GitHub employees. "I know this moment brings uncertainty, fear, and anxiety. ... While I can't answer every question, I will do my best to provide as much clarity as possible." Scott Hanselman, vice president of Microsoft's developer community, wrote on LinkedIn that it was a "day with a lot of tears," and the first time he's had to lay people off to support business goals that weren't his own. "I often have trouble separating my beliefs with the system that I participate in and am complicit in," he wrote. "These are people with dreams and rent and I love them and I want them to be OK."

Microsoft to Lay Off Around 6,000 Employees

The cuts will be across all levels and geographies Microsoft laid off 10,000 employees in 2023 Big Tech has been spending heavily on AI Microsoft said on Tuesday it was laying off less than three percent of its workforce, or around 6,000 employees, as the technology giant looks to rein in costs while funneling billions of dollars into its ambitious bet on artificial intelligence. The cuts will be across all levels and geographies and are likely the largest since Microsoft laid off 10,000 employees in 2023. The company let a small number of staff go in January over performance-related issues, but the new cuts are not related to that, according to CNBC, which first reported the news. Big Tech has been spending heavily on AI as they see the new technology as a major growth engine, while slashing costs elsewhere to safeguard profit margins. Google has also laid off hundreds of employees in the past year, as it looks to control costs and prioritise AI, media reports have said. "We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace," a Microsoft spokesperson said on mail. The company, which had 2,28,000 workers as of June last year, regularly uses layoffs to prioritise staffing in its main focus areas. Tuesday's move comes weeks after Microsoft posted stronger-than-expected growth in its cloud-computing business Azure and blowout results in the latest quarter, calming investor worries in an uncertain economy. But the cost of scaling its AI infrastructure has weighed on profitability, with Microsoft Cloud margins narrowing to 69 percent in the March quarter from 72 percent a year ago. Microsoft has earmarked $80 billion (roughly Rs. 6,83,255 crore) in capital spending this fiscal year, with most of it aimed at expanding data centers to ease capacity bottlenecks for artificial intelligence services. D.A. Davidson analyst Gil Luria said the layoffs showed Microsoft was "very closely" managing the margin pressure created by its heightened AI investments. "We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures," he said. © Thomson Reuters 2025

Microsoft's mass layoffs come despite a streak of profitable quarters

In January, Microsoft let go of 2,000 underperforming employees without severance. The retrenchment had also affected staff in the gaming and sales divisions. The recent layoffs are not on the grounds of performance, though.Microsoft began laying off about 6,000 workers, nearly 3% of its entire workforce, on Tuesday, in its largest job cuts in more than two years. The mass layoffs come just weeks after the tech giant reported strong sales and profits that beat Wall Street expectations for the January-March quarter. So, why is the Satya Nadella-led company firing thousands if its top and bottom lines are in good shape? Details on the layoffs Not the first time After a smaller round of layoffs in January, this will be the tech giant's largest cuts since 2023, when it shed 10,000 jobs, or nearly 5% of its workforce, as part of a broader industry trend post-pandemic. Strong financials Microsoft's results showed unexpected strength in its business. Sales surpassed $70 billion, up 13% from the same period a year earlier. Profit rose to $25.8 billion, up 18%. The results far surpassed Wall Street's expectations. Microsoft said revenue at its Azure cloud division rose 33% in the third quarter ended March 31, exceeding estimates of 29.7%, according to financial research firm Visible Alpha, part of S&P Global. AI contributed 16 percentage points to the growth, up from 13 points in the previous quarter. Rationale for the layoffs Microsoft has been investing heavily in AI, upping its expenditure for 10 consecutive quarters. The company is shifting resources toward these high-growth areas, and therefore cutting staff. The company is following other tech giants, including Meta and Amazon, which are also laying off scores of employees to optimise operations for long-term efficiency. This includes laying off middle management, automating tasks, and consolidating overlapping roles. In 2025 alone, Google has laid off about 200 employees, Meta has cut 3,600 jobs or 5% of its workforce, and Apple has laid off 100 employees in its digital services arm. DA Davidson analyst Gil Luria said the layoffs showed Microsoft was "very closely" managing the margin pressure created by its heightened AI investments. "We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures," he said.

Microsoft To Cut 6,000 Jobs Globally Amid AI-Driven Shift, Says Changes Necessary To 'Best Position The Company For Success' - Meta Platforms (NASDAQ:META), Amazon.com (NASDAQ:AMZN)

Microsoft Corp. MSFT announced on Tuesday it will eliminate approximately 6,000 positions globally, representing 3% of its workforce, as the tech giant seeks to streamline operations and reduce middle management layers. What Happened: "We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace," Microsoft said in a statement, reported the Financial Times. The Redmond, Washington-based company joins other tech giants, including Meta Platforms Inc. META and Amazon.com Inc. AMZN, in workforce reductions while simultaneously increasing investments in artificial intelligence technologies. This latest round follows performance-related cuts affecting about 2,000 Microsoft employees earlier this year. The company previously eliminated approximately 2,500 positions from its Xbox division after acquiring Activision Blizzard, along with 1,000 roles across its HoloLens and Azure cloud computing units in the same period. See Also: Trump Unveils 'Historic And Transformative' $600 Billion Saudi Deal, Predicts Markets Will 'Go A Lot Higher' Why It Matters: Microsoft's CFO Amy Hood recently told investors the company was focused on "building high-performing teams and increasing our agility by reducing layers with fewer managers." CEO Satya Nadella had earlier indicated that between 20-30% of the company's code was now being written using AI tools. The layoffs come despite Microsoft's strong financial performance. The company reported better-than-expected earnings for the quarter ending March and has outperformed its peers since the beginning of 2025, recently reclaiming its position as the world's most valuable company. Get StartedStart Futures Trading Fast -- with a $200 Bonus Join Plus500 today and get up to $200 to start trading real futures. Practice with free paper trading, then jump into live markets with lightning-fast execution, low commissions, and full regulatory protection. Get Started The cuts affect international offices and wholly-owned subsidiaries like LinkedIn, reflecting a broader trend of workforce rebalancing across the technology sector. Price Action: Microsoft Corp.'s stock closed at $449.14 on Tuesday, down 0.03% for the day. In after-hours trading, the stock dipped further to $448.27, a decline of 0.19%. Year to date, Microsoft's stock has gained 7.30%. Microsoft is experiencing modest growth but continues to benefit from strong momentum. However, the stock scores lower on quality and valuation metrics, according to Benzinga Edge Stock Rankings. MSFT maintains a positive trend across both short- and long-term indicators. Sign up to learn more. Photo Courtesy: Tada Images on Shutterstock.com Read Next: Cathie Wood Dumps Palantir As Stock Touches Peak Prices, Bails On Soaring Flying-Taxi Maker Archer Aviation Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMZNAmazon.com Inc$211.111.18%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum71.16Growth91.45Quality65.84Value49.56Price TrendShortMediumLongOverviewMETAMeta Platforms Inc$657.542.83%MSFTMicrosoft Corp$448.27-0.22%Market News and Data brought to you by Benzinga APIs

Microsoft to lay off 3% of global workforce -- roughly 7K jobs -- in...

Microsoft is cutting roughly 3% of its global workforce as the company shifts more resources toward the race to develop advanced artificial intelligence, the company confirmed on Tuesday. The layoffs will likely impact roughly 7,000 jobs across all divisions and locations of Microsoft's global business, the tech giant said. The company, led by CEO Satya Nadella, had 228,000 employees worldwide as of last June. "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace," a Microsoft spokesperson said in a statement, first obtained by CNBC. The layoffs are partially aimed at cutting layers of management at Microsoft, the spokesperson told the outlet. The cuts were announced just days after Microsoft reported quarterly revenue of $70.07 billion, beating Wall Street's expectations. Microsoft representatives did not immediately return The Post's request for further comment. The layoffs are the most significant at Microsoft since January 2023, when the company slashed 10,000 jobs. The company had also announced a small round of performance-based layoffs earlier this year. The company's shares were flat in Tuesday trading. Microsoft, one of the key backers of OpenAI, is locked in a fierce competition with Elon Musk's xAI, Mark Zuckerberg's Meta, Google and other companies developing AI tools. Nadella's firm has said it will spend up to $80 billion in fiscal year 2025 alone on AI-related efforts. D.A. Davidson analyst Gil Luria recently suggested that layoffs would be necessary as Microsoft looks to offset the steep price tag to develop advanced AI. "We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures," Luria said, according to Reuters. Microsoft isn't the only tech firm making cuts to its workforce. In January, Meta cut 5% of its staff as Zuckerberg looked to weed out what he described as "low performers."

Microsoft is cutting thousands of employees across the company

Microsoft Corp. said it will cut 6,000 workers across the company in an effort to reduce management layers. The planned terminations will amount to less than 3 per cent of total headcount and occur across geographies, employee levels and include LinkedIn, a spokesperson said. "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace," the spokesperson said. Microsoft, which employed 228,000 people in June 2024, deploys periodic layoffs, often to reorient its headcount toward priority areas. The company laid off 10,000 people in January 2023, including personnel at the HoloLens augmented reality headset unit and other hardware projects. About 2,000 workers will be impacted at Microsoft's headquarters in Redmond, Washington, according to a state filing Tuesday. The terminations are expected to commence on July 13. The company has been under pressure in recent years to keep a lid on costs amid massive spending on the data centers that power artificial intelligence services and the Azure cloud-computing unit. Microsoft has said it's on track to spend about $80 billion this fiscal year on the server farms. CNBC reported the layoffs earlier. Last year, Chief Executive Officer Satya Nadella said AI was helping the company save on labor costs. The theme came up again on Tuesday during a JP Morgan conference, when Microsoft finance executive Bill Duff said the company is "saving hundreds of millions of dollars a year" by using AI for customer support and reducing the need for human interaction. Duff said Microsoft is deploying AI across multiple divisions to help personnel analyze deals for compliance issues, write marketing materials and other tasks. The company routinely reorients its workforce away from legacy products and toward growth initiatives, Duff said. Late last month, Microsoft told workers it's planning to use third-party firms to handle more sales of software to small and midsize customers. It also restructured some technical teams earlier last month. Several other tech companies have also announced layoffs this year. Meta Platforms Inc. said in January that it planned to ax about 5 per cent of staff via performance-based terminations and would hire new people to fill those roles. The following month, Bloomberg reported that Salesforce Inc. was cutting more than 1,000 positions, in large part to make room for new AI-focused positions.

Microsoft to lay off 3% of workforce, CNBC reports

(Reuters) - Microsoft is laying off 3% of its workforce, or roughly 7,000 employees, CNBC reported on Tuesday, as the technology giant looks to rein in costs, while funneling billions of dollars into its ambitious bet on artificial intelligence. The cuts will be across all levels and geographies and are likely the largest since Microsoft laid off 10,000 employees in 2023, according to the report, which cited a company statement. Microsoft let a small number of employees go in January over performance-related issues, but the latest cuts are not related to that and aim to trim management layers, the report said. The company did not immediately respond to a Reuters request for comment. Its stock was slightly down in morning trading. Big Tech has been spending heavily on the new technology as they see AI as a major growth engine, while slashing costs elsewhere to safeguard profit margins. Google has also laid off hundreds of employees in the past year, as it looks to control costs and prioritize AI, media reports have said. Microsoft's reported move comes weeks after the company posted stronger-than-expected growth in its cloud-computing business Azure and blowout results in the latest quarter, calming investor worries in an uncertain economy. But the cost of scaling its AI infrastructure has weighed on its profitability, with Microsoft Cloud margins narrowing to 69% in the March quarter from 72% a year ago. Overall, gross margins were 69% for the last quarter, down from 70% a year earlier. Microsoft has earmarked $80 billion in capital spending this fiscal year, with most of it aimed at expanding data centers to ease capacity bottlenecks for artificial intelligence services. D.A. Davidson analyst Gil Luria said the reported move showed Microsoft was "very closely" managing the margin pressure created by its heightened AI investments. "We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures," he said. The company had a total of 228,000 workers, with 126,000 employees in the United States at the end of June last year, according to its annual filing. (Reporting by Aditya Soni and Akash Sriram in Bengaluru; Editing by Shinjini Ganguli and Anil D'Silva)

Microsoft to lay off around 3% of workforce in organization-wide cuts

(Reuters) - Microsoft said on Tuesday it was laying off less than 3% of its workforce, or around 6,000 employees, as the technology giant looks to rein in costs while funneling billions of dollars into its ambitious bet on artificial intelligence. The cuts will be across all levels and geographies and are likely the largest since Microsoft laid off 10,000 employees in 2023. The company let a small number of staff go in January over performance-related issues, but the new cuts are not related to that, according to CNBC, which first reported the news. Big Tech has been spending heavily on AI as they see the new technology as a major growth engine, while slashing costs elsewhere to safeguard profit margins. Google has also laid off hundreds of employees in the past year, as it looks to control costs and prioritize AI, media reports have said. "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace," a Microsoft spokesperson said on mail. The company, which had 228,000 workers as of June last year, regularly uses layoffs to prioritize staffing in its main focus areas. Tuesday's move comes weeks after Microsoft posted stronger-than-expected growth in its cloud-computing business Azure and blowout results in the latest quarter, calming investor worries in an uncertain economy. But the cost of scaling its AI infrastructure has weighed on profitability, with Microsoft Cloud margins narrowing to 69% in the March quarter from 72% a year ago. Microsoft has earmarked $80 billion in capital spending this fiscal year, with most of it aimed at expanding data centers to ease capacity bottlenecks for artificial intelligence services. D.A. Davidson analyst Gil Luria said the layoffs showed Microsoft was "very closely" managing the margin pressure created by its heightened AI investments. "We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures," he said. (Reporting by Aditya Soni and Akash Sriram in Bengaluru; Editing by Shinjini Ganguli, Anil D'Silva and Devika Syamnath)