Microsoft has confirmed that it is laying off approximately 6,000 employees, or around 3% of its workforce, as part of an ongoing effort to manage costs while investing heavily in artificial intelligence (AI). The layoffs, which span all levels and geographies, represent one of the largest workforce reductions since the company cut 10,000 jobs in 2023.
The decision follows Microsoft’s ongoing strategy to prioritize AI, despite the associated costs. The company has allocated $80 billion in capital spending for the current fiscal year, primarily for expanding data centers to support AI infrastructure. However, these investments have led to narrower margins in its cloud business, with Microsoft’s Azure cloud platform seeing a decline in profit margins, from 72% to 69%, in the most recent quarter.
A Microsoft spokesperson stated that the company continues to implement organizational changes necessary to remain competitive in a rapidly evolving marketplace. The move also comes after stronger-than-expected growth in Microsoft’s cloud business, calming investor concerns amid an uncertain economic climate.
Industry analysts, including D.A. Davidson’s Gil Luria, noted that the layoffs are likely a response to the pressure on profit margins caused by high AI infrastructure costs. Luria stated that, in light of ongoing AI investments, the company may need to reduce its headcount by at least 10,000 employees annually to offset higher depreciation levels from its capital expenditures.
Source: Swifteradio.com
