Microsoft Corp (NASDAQ:MSFT) is reportedly planning to lay off several thousand employees, primarily within its sales division, as part of a broader restructuring to align its workforce with a significant push into artificial intelligence (AI) development.
The planned cuts, which Bloomberg first reported on Thursday, follow a previous round of layoffs in May that affected about 6,000 employees. The new layoffs are expected in early July, coinciding with the start of its fiscal year.
The decision to reduce headcount comes as Microsoft plans to invest $80 billion in AI infrastructure during fiscal 2025. These investments are expected to support the expansion of data centres and the development of AI services, including advancements in the company’s Azure cloud platform.
AI shifts focus in the tech industry
Microsoft’s AI investments are part of a broader industry trend, with the company aiming to capitalise on AI's potential to enhance efficiency and fuel future growth. However, these developments are also contributing to a shift in staffing needs, particularly as AI technology automates tasks traditionally carried out by human employees.
Other major companies, such as Amazon, Meta, and Google, have also announced significant layoffs in 2025. Amazon CEO Andy Jassy has highlighted the role of AI in reducing corporate workforces, and the company plans to streamline its operations, with a heavy emphasis on automating more processes through AI and machine learning.
The tech sector has already seen widespread job cuts, with more than 60,000 positions eliminated across more than 130 companies by mid-May 2025. In this environment, the demand for roles that manage and optimise AI systems has increased, even as automation threatens more traditional jobs.
Long-term AI strategy
Microsoft has presented workforce reductions as part of a longer-term strategy to invest in new technology, increase operational efficiency and remain competitive in an increasingly AI-driven market.
Following the report on the layoffs, Microsoft’s stock saw a modest uptick, rising 0.46% in Wednesday trading to $480.24. The market’s reaction underscores investor confidence in Microsoft’s ongoing transition toward AI and cloud services, despite the workforce reductions. Year to date, the shares are up about 14%.