In its fourth major workforce reduction since early 2024, Microsoft has confirmed plans to eliminate approximately 9,000 positions, about 4 percent of its global staff, as part of a strategic realignment aimed at accelerating its artificial intelligence agenda. This latest round follows prior cuts in January 2024, May (6,000 jobs), and a smaller June wave. With these reductions, Microsoft has now slashed more than 7 percent of its workforce in just 18 months.

The cuts are concentrated in the Xbox gaming division and global sales and marketing teams. About 830 positions are reportedly based at its Redmond headquarters. A spokesperson said the changes aim to “reduce management layers, increase agility and focus on strategic growth areas like AI and cloud computing”

Microsoft is reallocating capital to support a heavy AI infrastructure investment—$80 billion earmarked for FY 2025—especially in data centers and tools like Azure and Copilot, which it views as core future growth drivers. CEO Satya Nadella has noted that up to 30 percent of Microsoft’s internal code is AI‑generated, underscoring the transformative impact of AI on its operations. In addition to the layoffs, Microsoft is flattening its organizational structure, removing mid-management layers, and transitioning traditional sales roles to more technical “solutions engineer” positions to better position the company for its AI-first strategy.

While Microsoft reported strong quarterly earnings—with $70 billion in revenue and $26 billion in net income—analysts stress the importance of the cuts in safeguarding profit margins amid rising AI costs. Dan Ives of Wedbush noted the company is “keeping with efficiency,” stressing the need to meld AI scaling with cost control. Microsoft joins other major tech firms like Meta, Google, and Amazon in conducting layoffs while reinvesting in AI capabilities. The recurring job cuts in Xbox suggest pressure to deliver stronger margin contributions post its Activision Blizzard acquisition.