Microsoft to Cut Thousands of Jobs as July 1 Marks New Phase of AI-Focused Restructuring
Published on 07/03/2026 at 08:24 | Redaktion boerse-global.de
The software giant is preparing to announce another round of job cuts next week, coinciding with the start of its new fiscal year on July 1. The reductions will affect less than 2.5 percent of Microsoft’s global workforce of roughly 228,000 people, which still translates into several thousand positions. The axe is expected to fall hardest on the Xbox gaming division, sales, and consulting units.
Xbox, in particular, is facing an overhaul under its new chief, Asha Sharma, who has called for a fundamental reset. Microsoft poured approximately $20 billion into the gaming business over the past five years, funding content, platforms, and hardware subsidies. Yet over that same period, annual revenue from the division shrank by nearly half a billion dollars. Soaring hardware costs and declining sales have forced the company to slash budgets aggressively.
The decision to cut staff at the start of the fiscal year is a recurring pattern for Microsoft. In July of last year, roughly 9,000 employees were let go. This year’s wave is expected to be smaller, partly because the company launched a voluntary early-retirement program earlier in the year. About 3,000 eligible U.S. workers accepted the offer, dampening the need for involuntary layoffs.
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The restructuring is part of a broader reallocation of capital toward artificial intelligence. Microsoft invested over $100 billion in AI and cloud infrastructure during the just-completed fiscal year, with a significant chunk going into AI chips. The shift mirrors a sector-wide trend: Alphabet, Amazon, Meta, and Microsoft are collectively expected to spend around $700 billion on AI infrastructure in 2026 even as they reduce headcount. Amazon cut 16,000 corporate jobs in January, Oracle shed 21,000 positions, and Meta conducted its own deep layoffs in May. Nvidia CEO Jensen Huang has dismissed the notion that AI alone is to blame, calling it "lazy" to attribute all job cuts to the technology.
At the bourse, Microsoft’s shares closed Thursday at €341.30. The stock has managed a 4.09 percent gain over the past week, but the monthly picture is weaker with a 7.34 percent decline. Over the trailing twelve months, the loss stands at 19.52 percent, and since the start of the year the equity has shed 15.44 percent. The current price sits 28.61 percent below the 52-week high of €478.10 reached on October 28 last year. However, it retains an 11.14 percent cushion above the 52-week low of €307.10 marked on June 25. Both the 50-day moving average of €350.63 and the 200-day moving average of €381.92 trade above the current level. The relative strength index of 51.2 signals neither overbought nor oversold conditions.
The contrast between Microsoft’s weakening stock and its robust AI business is striking. The AI division now generates an annualized revenue run rate of $37 billion, growing at 123 percent, and is a key driver of the Intelligent Cloud segment. Analysts point to the operating strength even as the share price suffers.
The upcoming job cuts will likely be interpreted as a signal that Microsoft is aligning its cost base with its AI ambitions, even if that means sacrificing traditional revenue engines like gaming and sales. Investors are demanding clearer signs of cost discipline as the company navigates the most expensive investment cycle in its history. Official confirmation of the layoffs is expected next week.
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