- Microsoft has announced nearly 4,800 job cuts, joining the ongoing AI-driven tech layoff wave.
- Big Tech's total AI spending is expected to exceed $700 billion this year, increasing pressure to show returns.
- Amazon and Meta Platforms have also laid off thousands of employees this year, continuing the industry trend.
- Microsoft projects capital expenditure of $190 billion for 2026, far above analysts' expectations.
- The gaming division's new head, Asha Sharma, indicated that the profit margin declined to 3%, necessitating a restructuring that could include potential M&A.
Microsoft's decision to cut 4,800 jobs comes as part of a broader trend in the tech industry, where companies like Amazon and Meta Platforms have also laid off thousands this year.3
The layoffs represent 2.1% of Microsoft's workforce and follow a challenging first half of 2026, during which the company's shares fell nearly 23%, marking its worst performance since 2022.
The software giant's focus on artificial intelligence is evident, as it plans to spend heavily on AI infrastructure, with Big Tech's AI spending expected to exceed $700 billion this year. This investment is crucial for companies to demonstrate returns while managing rising costs.2
Earlier this year, Microsoft offered voluntary buyouts to about 7% of its US workforce, totaling around 9,000 employees. The company also projected a capital expenditure of $190 billion for 2026, significantly above analysts' expectations.
Additionally, the gaming division's new head, Asha Sharma, indicated a need for a reset due to a profit margin decline to 3%, suggesting potential restructuring, including mergers and acquisitions.5
“Big Tech's total AI spending is expected to exceed $700 billion this year, increasing pressure to demonstrate returns. Microsoft's gaming division, led by new head Asha Sharma, reported a profit margin decline to 3%, necessitating a restructuring that may include M&A.”
