Microsoft To Cut About 5,000 Jobs As AI Spending Increases

Microsoft is preparing to cut thousands of jobs in another round of layoffs that could be announced as early as next week.

This comes as the company focuses on reducing costs while increasing investment in artificial intelligence.

According to people familiar with the plans, the cuts will affect fewer than 2.5% of Microsoft’s global workforce. With about 220,000 employees worldwide, that would amount to approximately 5,000 roles.

The layoffs will affect several parts of the business, including sales, consulting and the Xbox gaming division. One person familiar with the matter said some affected employees could be offered other roles within the company immediately after the announcement.

Microsoft has not commented on the reports.

The company has regularly taken decisions on its workforce at the start of a new financial year. In May last year, Microsoft cut about 6,000 jobs before announcing another round of roughly 9,000 layoffs in July, representing nearly 4% of its workforce.

This latest round is expected to be smaller than last year’s exercise. People familiar with the matter said the company had already reduced the number of compulsory layoffs after many eligible employees accepted a voluntary retirement programme introduced earlier this year in the United States.

The programme was open to employees at level 67 and below who met the company’s age and service requirements. Sales staff on commission-based pay were excluded from the offer.

The planned cuts come as Microsoft spends heavily on AI and cloud infrastructure. Reports say the company invested more than $100 billion in AI and cloud projects during the 2026 financial year, with a large share going towards AI chips and related infrastructure.

The Xbox business is also expected to face significant changes. The gaming division has been under pressure after years of heavy spending on content, hardware and gaming platforms.

Earlier this year, Xbox Gaming Chief Executive Officer Asha Sharma told employees the business needed a “reset”. Reports have also suggested that Microsoft is reviewing parts of its gaming operations, with some studios facing an uncertain future.

Before now, several companies have reduced their workforce this year as they balance AI investment with efforts to control operating costs.

Meta announced plans to cut about 10% of its workforce this year, while Amazon said it would eliminate about 16,000 jobs globally.

Data also shows technology companies in the United States have announced more than 123,000 job cuts in 2026, with growing AI investment being one of the main reasons behind many of the reductions.

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