Vancouver, British Columbia – July 23, 2022: Microsoft logo on an office tower exterior in downtown Vancouver.
The Microsoft said on Monday it will cut about 2.1% of its global workforce, or approximately 4,800 jobs, as part of the restructuring of its Commercial and Xbox units, adding to a wave of layoffs driven by artificial intelligence in technology companies.
The historical investments of big technology companies in AI, which are expected to exceed US$700 billion This year, they are putting pressure on companies to demonstrate the return on investment in this technology and to offset the rising cost of implementing it in their businesses.
THE Amazon and the Meta Platforms they also laid off thousands of employees this year.
In a statement to employees, Microsoft’s chief human resources officer, Amy Coleman, however, stated that “the positions eliminated today will not be replaced by AI.” “At the same time, it’s true that AI is changing the way work gets done.”
The bulk of the cuts will affect the Xbox unit, which has faced increasing challenges in recent years as its push into subscriptions and cloud gaming has failed to offset falling console sales and a dearth of blockbuster titles.
The new head of the gaming division, Asha Sharma, said in a statement to employees that the unit will cut about 3,200 jobs throughout fiscal 2027, including 1,600 mass layoffs on Monday. Four of its game studios will move under new management, it said in the statement.
The company is considering options for the gaming unit, including a possible spin-off or restructuring as a wholly owned subsidiary, as reported by the Information last month.
“These targeted cuts make the announcement look more like a portfolio reallocation and operational discipline than a new catalyst for the stock,” said Parth Talsania, chief executive of Equisights Research.
“In the near term, the market is likely to reward Microsoft less for headcount reductions and more for evidence that AI monetization is growing faster than AI-related costs.”
The company’s shares fell around 1.5% this Monday, after a drop of almost 23% in the first six months of 2026, the worst performance for a first half since 2022.
The software giant earlier this year offered voluntary layoff programs to about 7% of its U.S. workforce, or roughly 9,000 employees.
Microsoft typically reduces the number of jobs near the end of its fiscal year in June, when it sets its spending plans for the following year.
“Microsoft has been reducing its headcount to finance its investments in AI. By keeping the number of workers reduced, the company has been able to accelerate revenue growth while maintaining the same profit margins,” said Gil Luria, managing director at DA Davidson.
Rising demand for AI has driven the growth of cloud computing business Azure from Microsoft, which was the exclusive seller of Microsoft models OpenAI until April, but the rising cost of building data centers to run these services is putting pressure on its cash flow.
The company, which is expected to release its results later this month, had predicted in April that Azure’s quarterly sales would be above Wall Street estimates, but also released a spending projection of US$190 billion for 2026, which far exceeded expectations.
AI tools capable of automating more and more routine business tasks have also emerged as a threat to its lucrative software business, while a rise in memory chip prices, driven by demand from data centers, forced Microsoft to raise prices for Xbox consoles at a time when demand for the console was already low.
Source: www.moneytimes.com.br
