Microsoft is reportedly planning thousands of layoffs as it spends on AI

By Nora Redmond

Microsoft has been engaging in a series of layoffs

Shares in Microsoft have slumped 19% in the past month.

Microsoft is reportedly planning to announce thousands of layoffs as the company aims to increase spending on artificial intelligence.

The tech giant is expected to cut less than 2.5% of its overall workforce of about 220,000 people, according to people familiar with the matter, Business Insider reported on Tuesday night.

They added that the layoffs are due to be announced next week, though the precise timing remains uncertain, and some of those affected will be offered alternative positions, according to the report. Roles across consulting, sales and the Xbox gaming unit are among those likely to be axed, the people also said.

Microsoft declined to respond to MarketWatch's request for comment and confirmation.

The news comes as the almost-$3 trillion company has committed to spending $190 billion on AI infrastructure at a time when investors are growing increasingly worried about massive capital expenditure among "Magnificent Seven" companies because of uncertainty over whether those budgets will be successful in producing strong returns.

Shares in Microsoft (MSFT) climbed just more than 1% in premarket trading following the report, however, its stock has slumped 19% in the past month, wiping close to $600 billion from its value.

The 51-year-old company has engaged in a series of job cuts since the aftermath of the Covid-19 pandemic, first announcing its plans to let go 10,000 employees in January 2023, according to a tally from BBC News. In the two years that followed, more positions were eliminated as Microsoft shifted its focus to funding AI in the race for dominance in the industry. Last July, 9,000 workers were laid off, and two months beforehand, 6,000 others were made redundant.

Sweeping job cuts have been announced across Big Tech companies including Meta Platforms (META)and Amazon (AMZN) in the past few years as billions of more dollars are being allocated to AI.

-Nora Redmond

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07-01-26 0529ET