Microsoft's $27 Billion Profit Surge Fueled by AI and Cloud, Amid Recent Layoffs

In the wake of Microsoft layoffs, shareholders win as the company reports $27 billion profit and becomes only the second company worth $4 trillion

In spite of (or perhaps more accurately because of) recent mass layoffs at Microsoft, the company is now valued at $4 trillion, only the second company to hit that valuation on the stock market after Nvidia. As we enter the dog days of summer, many companies are reporting their earnings for the previous quarter. Microsoft is among them and according to its latest earnings call, the tech giant hauled in a Scrooge McDuck-esque $27.2 billion in net income, up 24% from the same period last year. And it can all largely be blamed on AI and Azure, Microsoft's cloud computing platform where the company is heavily investing in AI while it remains the tech industry's obsession du jour. "Cloud and AI is the driving force of business transformation across every industry and sector," CEO Satya Nadella said in the report. "We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads." These are numbers and business wins that won't be appealing to the more than 9,000 people that were laid off by Microsoft in the last month across multiple sectors of the business. Especially after Nadella's inane comments about AI and the layoffs. "This is the enigma of success in an industry that has no franchise value. Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding," Nadella wrote in a company blog. "But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." According to the financials revenue was up for Microsoft across the board, including in its Xbox, Windows, Microsoft 365 and LinkedIn divisions -- just not as much as Azure cloud and AI. As GamesRadar reports, the company had a choice to cut about four percent of its workforce or reduce some spending on AI. It's obvious which way that axe fell, now that Microsoft has laid off roughly 9,000 people in the last few months and roughly 15,000 so far this year. Now, investors who don't even work for the company are reaping the profits as Microsoft's AI bet appears to have paid off financially -- at least in the short term.

Microsoft lays off thousands, makes $27 billion profit in Q2 -- CEO Satya Nadella doubles down on AI mania

Microsoft layoffs in 2025 and Satya Nadella's AI strategy: At a time when thousands of Microsoft employees are still reeling from sudden job cuts, the tech giant has posted $27.2 billion in net income for the latest quarter, a 24% jump from the previous year, as per a report. The driving force behind that growth is AI and cloud technology, according to a GamesRadar report. While the financial figures made headlines, the human cost behind them hasn't gone unnoticed. Just weeks before this earnings report, Microsoft laid off around 9,000 employees across multiple divisions, as per the GamesRadar report. The decision sparked widespread frustration among workers, especially as the company continues to invest billions into artificial intelligence and massive data infrastructure projects, according to the GamesRadar report. ALSO READ: Atlassian boss Mike Cannon-Brookes axes 150 jobs via AI, then defends his private jet in brutal video message In a statement released with the earnings, Microsoft CEO Satya Nadella leaned into the company's AI-first strategy, as per the report. Nadella pointed out that, "Cloud and AI is the driving force of business transformation across every industry and sector," as quoted by GamesRadar. He highlighted that, "We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads," as quoted in the GamesRadar report. Even previously, Nadella has highlighted superlative comments about AI, which accompanied an acknowledgement of the company's layoffs amid "thriving" financial wins as, simply, "the enigma of success," as reported by GamesRadar. ALSO READ: Morgan Stanley just boosted Nvidia's target -- Here's why Blackwell chips are game-changers According to reports that surfaced in the wake of Microsoft's decision to lay off 9,000 employees, the company was faced with a stark choice: scale back its aggressive spending on AI or let thousands of workers go, as reported by GamesRadar. It clearly chose the latter option, and for many, it felt like watching a small city's worth of people lose their livelihoods so a tech behemoth could double down on its next big bet, according to the report. However, "in the amoral world of publicly traded companies, it sadly appears that it's paying off for now, wrote GamesRadar. Meanwhile, Microsoft saw a 10% boost in gaming revenue in this quarter, along with content and services revenue up 13%, which was largely "driven by growth in first-party content and Xbox Game Pass," that helped balance out a 22% drop in Xbox hardware sales, as per the report. Even gaming, along with Windows, Microsoft 365, and LinkedIn, all showed growth in the latest quarter, however, the rise was not just not as much as cloud and AI, as reported by GamesRadar. Why did Microsoft lay off 9,000 employees recently? Microsoft decided to cut jobs mainly to prioritize investments in AI and cloud computing, which are driving its future growth, as per the GamesRadar report. What is driving Microsoft's financial growth? The main drivers are AI and cloud technology, especially revenue from Azure.