Microsoft will reduce its global workforce by approximately 4,800 employees, representing about 2.1% of its total staff, following an earlier announcement that fewer than 2.5% of employees would be affected.
The layoffs come during a challenging period for the company. Microsoft’s shares have declined by nearly 23% in the first half of 2026, marking their weakest performance since 2022.
The workforce reduction reflects a broader trend across the technology industry, where major companies are increasing investments in artificial intelligence (AI) infrastructure while taking measures to manage operating costs. Industry analysts estimate that global AI-related spending could exceed $700 billion in 2026. Several large technology firms, including Amazon and Meta, have also announced workforce reductions this year.
Earlier in 2026, Microsoft offered voluntary separation packages to approximately 9,000 employees in the United States. The company has historically reviewed its workforce near the close of its fiscal year in June as part of its annual business planning.
Although Microsoft’s Azure cloud platform continues to benefit from growing demand for AI services, the company is also facing higher capital expenditure requirements for expanding data center capacity. In April, Microsoft projected capital spending of approximately $190 billion for 2026, exceeding many market expectations. The company has also cited rising component costs, including memory chips, as one of the factors behind recent Xbox price increases.
Microsoft is expected to release its quarterly financial results later this month. Investors will be watching closely to assess whether continued AI-driven growth can offset rising infrastructure costs and support the company’s long-term financial outlook.
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