Microsoft (Nasdaq: MSFT) announced Wednesday it will lay off about 9,000 employees, roughly 4% of its global workforce, marking the company’s largest job cuts since eliminating 10,000 positions in 2023.
This batch of layoffs is Microsoft’s third major workforce reduction this year, following cuts of 6,000 jobs in May and 305 positions in June. The tech giant employed 228,000 workers as of June 2024. The July cuts were first reported by Bloomberg mid-June.
Read: Microsoft to Cut Thousands More Jobs in July, Targeting Sales Teams
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Microsoft’s Xbox gaming division was hit particularly hard, with several high-profile games canceled including Rare’s “Everwild,” the complete cancellation of “Perfect Dark,” and closure of The Initiative studio. ZeniMax Online Studio’s new MMORPG was also canceled, along with more than 70 layoffs at Forza Motorsport developer Turn 10.
The job cuts come as Microsoft invests $80 billion this fiscal year in artificial intelligence infrastructure. The massive spending has pressured profit margins, with Microsoft Cloud margins falling to 69% from 72% the previous year.
D.A. Davidson analyst Gil Luria said the company may need to “trim at least 10,000 jobs annually to offset depreciation from its capital investments” if spending continues at current rates.
The tech industry has seen widespread layoffs this year, with 147 companies cutting 63,443 workers in 2025, according to Layoffs.fyi. Other major firms, including Meta (Nasdaq: META), Google (Nasdaq: GOOG), and Disney (NYSE: DIS) have also announced workforce reductions.
Xbox leader Phil Spencer told employees the gaming division would “end or decrease work in certain areas” while focusing on strategic growth. Affected employees will receive priority for open positions across Microsoft Gaming.
Microsoft’s stock declined slightly following the announcement but remains near record highs. The company ranks as the world’s second-most valuable corporation behind Nvidia (Nasdaq: NVDA).
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