Microsoft Cuts 4,800 Jobs Amid Heavy AI Spending

New Delhi (IANS) — Microsoft has announced another round of layoffs, cutting about 4,800 jobs, or roughly 2.1 percent of its global workforce, as the technology giant continues to pour money into artificial intelligence while trying to improve operational efficiency.

The latest job cuts come as major technology companies seek to balance heavy AI investments with tighter cost controls. Amazon and Meta have also reduced their workforces this year as spending on AI infrastructure continues to rise. Global AI-related investments by major technology companies are expected to exceed $700 billion in 2026.

The layoffs follow a difficult first half of the year for Microsoft. The company’s shares fell nearly 23 percent during the first six months of 2026, marking their weakest first-half performance since 2022.

Earlier this year, Microsoft offered voluntary buyouts to nearly 9,000 employees in the United States, representing about 7 percent of its domestic workforce. The company has typically made workforce adjustments near the end of its fiscal year in June as it prepares budgets and spending plans for the new financial year.

Microsoft’s Azure cloud computing business has continued to benefit from strong demand for AI services, but the company is facing rising costs tied to the expansion of its data center infrastructure. Until April, Azure was the exclusive cloud provider for OpenAI’s models, a relationship that helped drive growth in Microsoft’s cloud business. However, the investments needed to support AI services have added pressure to the company’s cash flow.

Microsoft has remained upbeat about its AI business despite the financial strain. In April, the company forecast quarterly Azure revenue above Wall Street expectations and projected capital expenditures of $190 billion for 2026, well above analysts’ estimates. Microsoft is expected to report its latest financial results later this month.

The rapid adoption of AI is also reshaping Microsoft’s traditional software business by automating routine tasks. At the same time, higher memory chip prices driven by demand from AI data centers have increased production costs. Those rising costs have pushed Microsoft to raise Xbox console prices even as demand for the gaming hardware remains weak. (Source: IANS)