Microsoft is preparing for another wave of layoffs that could affect up to 5,000 employees, or approximately 2.5% of its global workforce, as early as next week, according to a report from Business Insider cited by Fox Business [1]. The cuts are expected to impact sales, consulting, and the Xbox gaming unit. This move follows last summer's layoff of roughly 9,000 employees, which represented about 4% of Microsoft's workforce at the time [1]. Microsoft's most recent annual SEC filing lists its workforce at approximately 228,000 full-time employees as of June 30, 2025, meaning a 2.5% reduction would equate to about 5,700 job cuts [1].
Some employees affected by the layoffs will reportedly be offered new roles within the company immediately [1]. The restructuring is part of a broader trend in the tech sector, with companies cutting costs and reallocating resources toward artificial intelligence initiatives [1]. In the past month, Microsoft's stock price declined about 19%, marking one of its worst monthly performances since the dot-com crash, amid investor concerns that AI could eventually replace certain software services, including some offered by Microsoft [1].
The Xbox division is expected to be significantly impacted, with reports of planned layoffs, reductions to marketing and budgets, and potential studio closures, mergers, spin-offs, and canceled game projects [1]. Xbox CEO Asha Sharma recently called for a "reset" of the business following months of uneven performance [1]. Additionally, Xbox recently raised prices on its gaming consoles by $100 to $150 worldwide, citing increased demand for memory and storage driven by the AI boom [1].
The upcoming layoffs are expected to be smaller than previous rounds, partly due to a voluntary retirement buyout program introduced earlier this year, which saw roughly one-third of eligible employees opt in [1]. Last year, Microsoft reportedly eliminated about 15,000 roles across multiple rounds of layoffs, including 6,000 positions in May and 9,000 in July [1].
Despite the recent stock slump, Microsoft shares closed at $390.49, up $6.21 or 1.62% on the day [1].
CONCLUSION
Microsoft's planned layoffs reflect ongoing restructuring efforts as the company shifts resources toward AI and addresses challenges in its Xbox division. The significant workforce reductions and recent stock volatility highlight investor concerns about the impact of AI on Microsoft's core businesses. The market will be closely watching how these changes affect Microsoft's long-term growth and competitiveness.