Microsoft axes 9,100 jobs in fourth round of layoffs after AI pivot

Microsoft will cut about 9,100 jobs globally, around 4% of its workforce, marking its fourth major layoff round in 18 months. The latest cuts, reported by the Seattle Times on July 2, come as the company continues to shift resources toward artificial intelligence and cloud services.

This round targets roles across sales, marketing, and Xbox, with the gaming division among the hardest hit. Microsoft Gaming head Phil Spencer said the decision aims to flatten management layers and prioritise high-impact projects. Affected employees will receive severance packages, healthcare benefits, and support for internal job placements within Microsoft Gaming.

The layoffs follow multiple reductions earlier this year. In May, Microsoft cut over 6,000 jobs focused largely on engineering and product teams. A smaller wave in June trimmed additional roles, and more than 1,000 employees were let go just ahead of the new fiscal year starting July.

Microsoft leadership has framed these cuts as necessary to build more agile and “high-performing” teams while maintaining margins during heavy AI investment. The company has earmarked $80 billion for AI infrastructure and Azure cloud data centres for fiscal 2025, a record commitment reflecting its aggressive push to dominate enterprise AI services.

The broader tech sector is undergoing similar transitions. Meta, Google, and Amazon have each conducted large layoffs in recent quarters as they reallocate resources to AI and automation while facing economic headwinds. Analysts see these moves as part of a larger recalibration, where tech giants focus less on headcount-driven expansion and more on targeted, high-value innovation.

For Microsoft, the restructuring signals a shift from broad-based growth to laser-focused execution in AI and cloud. As it bets on AI to define the next decade, the company is under pressure to balance rapid innovation with profitability. The layoffs, though painful for affected staff, are seen internally as part of a long-term strategy to stay ahead of rivals like Google and Amazon in enterprise services.

Employees impacted by the cuts are being offered transition assistance, though morale across certain divisions has reportedly dipped. While the move underscores Microsoft’s ambition to lead in AI, it also highlights the human cost of aggressive corporate pivots in a fast-evolving tech landscape.