Microsoft recently laid off about 9,000 employees despite making billions

: Microsoft, producing historic profits, has made controversial layoffs affecting around 9,000 employees, aligning less than 4% of their workforce. These reductions contrast with financial surges: a net income hike of 18% to $25.8 billion and revenue increase of 13% to $70.1 billion, marking Microsoft's market value at $3.65 trillion, following Nvidia. Questionably timed with the AI surge, these layoffs coincide with aggressive AI investments, as Microsoft projects AI to handle 95% of its code by 2030. The company's strategic pivot towards AI innovation suggests a profound industry impact, reflecting a broader industrial trend with companies like Salesforce and Klarna also downsizing their human workforce.

Microsoft has recently laid off around 9,000 employees, marking its largest workforce reduction since early 2023. This new round of cuts follows previous layoffs of 6,000 in May and hundreds more in June. The affected roles span multiple global divisions, including engineering, sales, and gaming, particularly within Xbox and ZeniMax teams. Microsoft stated the layoffs are part of a broader restructuring aimed at boosting operational efficiency and aligning resources with strategic priorities.

The company justified the layoffs as necessary to streamline operations and eliminate redundant layers of management. Microsoft emphasized its ongoing investments in artificial intelligence as a core reason behind internal restructuring. The company has committed tens of billions of dollars toward building out AI infrastructure and integrating AI features across its product suite, including Microsoft 365 and Azure.

Notably, these job cuts occurred despite Microsoft posting robust financial results. In its most recent quarterly report, the company announced revenue of $70 billion and net income of $26 billion. Its stock has surged more than 17% since the beginning of 2025, underscoring investor confidence in Microsoft’s AI-centered strategy despite the controversial layoffs.

Gaming divisions were hit hard, with Xbox CEO Phil Spencer confirming project cancellations and studio reductions. Games like Everwild and Perfect Dark have been deprioritized or shelved. Several support roles in marketing, user testing, and live services were also impacted, reflecting a pivot toward fewer, larger-scale franchises and services.

These layoffs reflect a broader trend in the tech industry where even highly profitable companies are aggressively reshaping their workforces in preparation for an AI-first future. Microsoft insisted that performance was not the key factor in most of the layoffs and reaffirmed its commitment to treating affected employees with support and severance.

Sources: The Verge, Business Insider, Wired