Microsoft has initiated a sweeping restructuring, eliminating thousands of job roles this week. The tech company would layoff a total of 4800 job roles—approximately 2.1% of its global workforce.
The mass layoffs arrive at the start of Microsoft’s new fiscal year, following a painful stretch on Wall Street where the tech giant’s stock plunged nearly 23% in the first half of 2026—marking its worst first-half performance since the 2000 dot-com crash.
Notably the cuts fall heaviest across the company’s commercial sales groups and its long-struggling Xbox gaming division, which is facing the most radical organizational overhaul in its history.
The massive AI spending squeeze:
While AI demand has dramatically boosted revenue for Microsoft’s Azure cloud-computing infrastructure, the mind-boggling capital expenditures (CapEx) required to build AI data centers are severely straining the company’s free cash flow.