Microsoft joins AI-driven tech layoff wave with 4,800 job cuts

Microsoft is cutting about 2.1 per cent of its workforce, or roughly 4,800 jobs, as the Windows maker restructures parts of its commercial and Xbox businesses, joining other tech titans in a wave of layoffs as they shift investments towards AI infrastructure.

The company’s shares were down 1.5 per cent in early trading.

Big Tech’s historic AI outlays, set to top US$700 billion (S$906 billion) in 2026, are piling pressure on companies to show returns from the technology and offset the rising cost of rolling it out across their businesses.

Amazon and Meta Platforms have also laid off thousands of employees in 2026.

In a memo to employees, chief people officer Amy Coleman said AI was changing how work gets done by automating some routine tasks, but said the layoffs were part of a broader effort to realign resources and operating structures with the company’s priorities.

“I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done.”

Microsoft announced the cuts on July 6 following a nearly 23 per cent slump in its shares in the first six months of 2026, the worst first-half performance since 2022.

The software giant earlier in 2026 offered voluntary buyouts to about 7 per cent of its US workforce, or about 9,000 employees. Microsoft often trims jobs near the end of its fiscal year in June as it sets spending plans for the new year.

“Microsoft has been managing down its workforce in order to pay for its AI investments. By keeping its headcount down they have been able to accelerate revenue growth while maintaining the same margins,” said Gil Luria, managing director of D.A. Davidson.

-Reuters