Microsoft has announced a significant workforce reduction, cutting approximately 9,000 jobs, or nearly 4% of its global staff. This move, the second major round of layoffs in 2025, is part of a broader restructuring aimed at streamlining operations and reallocating resources towards aggressive investments in artificial intelligence (AI) infrastructure and strategic growth areas.
Microsoft's Strategic Pivot Towards AI
Microsoft's decision to cut 9,000 jobs comes as the tech giant intensifies its focus on artificial intelligence. The company plans to invest heavily in AI infrastructure, with an allocated budget of $80 billion for its 2025 fiscal year. This substantial investment includes funding for custom Maia chips, tens of thousands of Nvidia H100 GPUs, and even the construction of a nuclear-powered data centre in Finland. The goal is to support real-time inference for AI tools like Microsoft Copilot, which demand immense computing power.
Internal estimates suggest these job cuts will save approximately $1.7 billion annually, with these savings being redirected to AI-heavy investments. This strategic shift indicates a "straight swap: fewer salaries, more silicon," as Microsoft prioritises machine-driven infrastructure over human capital in certain areas.
Impact on Workforce and Divisions
The layoffs will affect various teams, geographies, and tenures across Microsoft's global operations. While the company did not provide specific details on all affected divisions, it confirmed that its gaming division, which employs over 20,000 staff, has been impacted. Notably:
King Division (Candy Crush): The Stockholm-based King division is cutting 10% of its staff, equating to about 200 jobs.
Other Gaming Units: European offices like ZeniMax have also begun laying off employees, alongside the cancellation of several major gaming projects.
Sales and Engineering: Previous rounds of layoffs in May primarily affected sales and engineering roles, and these areas are expected to continue to see reductions.
As of June 2024, Microsoft employed approximately 228,000 people globally. This latest round of cuts follows a previous reduction of 6,000 employees in May and other performance-related adjustments earlier in the year.
Broader Industry Trend and Financial Context
Microsoft's layoffs are part of a wider trend within the tech industry, where major players are consolidating costs and reorganising for an AI-driven future. Other tech giants, including Meta, Google, and Amazon, have also announced significant job cuts in recent months as they navigate economic uncertainties and invest heavily in AI.
Despite the layoffs, Microsoft remains highly profitable. For the March quarter, the company reported a net income of $25.8 billion, an 18% year-on-year increase, on revenue of $70 billion. Investor confidence remains strong, fuelled by expectations of continued growth in Microsoft's Azure cloud business and enterprise software subscriptions. The company's share price hit a record high of $497.45 on 26 June 2025, just days before this announcement, underscoring the market's positive outlook on its strategic direction.
Sources
Microsoft to cut about 4% of jobs amid hefty AI bets, Yahoo Finance
