Microsoft Cuts 5,000 Jobs in Third Layoff Round Amid Heavy AI Spending

Microsoft has continued expanding data centers and AI infrastructure to strengthen its position in the artificial-intelligence market, committing as much as $190 billion in total. The massive capital spending has fueled investor concerns that costs could spiral out of control and intensified pressure on the company’s shares and operations, making workforce reductions an important tool for balancing its allocation of funds.

As of July 2026, Microsoft had launched its third major round of layoffs within a year. Its latest announcement said 4,800 jobs would be eliminated, mainly in its enterprise business and Xbox, while some reports estimated the final toll could reach 5,500. Xbox also began a restructuring and put four studios up for sale, but Microsoft’s head of human resources denied that the layoffs were directly attributable to AI.