Microsoft joins AI-driven tech layoff wave with 4,800 job cuts

Microsoft is cutting roughly 4,800 jobs, about 2.1% of its workforce, as it restructures parts of its commercial and Xbox businesses — joining Amazon and Meta in a wave of tech layoffs as the industry redirects spending toward AI infrastructure.

In a memo, Chief People Officer Amy Coleman stated directly that the eliminated roles are not being replaced by AI, while acknowledging the technology is changing how work gets done. Analysts see it differently: D.A. Davidson's Gil Luria said Microsoft has been managing down headcount to fund its AI buildout while protecting margins.

The cuts follow a 23% share slump in the first half of 2026, Microsoft's worst since 2022, and a $190 billion spending projection that stunned Wall Street.

The gaming division faces the deepest overhaul. New Xbox chief Asha Sharma said margins have fallen to 3% and warned the trajectory cannot continue, with a spinoff reportedly under consideration.