• Microsoft (MSFT) is cutting 4,800 jobs, roughly 2.1% of its global workforce, primarily in its Commercial and Xbox divisions.
  • The company emphasized the layoffs are not driven by AI replacing employees, but rather a strategic restructuring to improve operations.
  • The move comes amid broader tech industry adjustments as firms rebalance cost structures while investing in AI and cloud.

Microsoft on Thursday announced a restructuring that will eliminate 4,800 positions, or about 2.1% of its global workforce, with the majority of cuts concentrated in its Commercial and Xbox divisions. The company said the layoffs are aimed at streamlining operations and positioning its gaming business for long-term growth, according to a person familiar with the matter.

“These are not AI-related job eliminations,” a Microsoft spokesperson said in a statement. “The changes are part of a broader effort to align our workforce with strategic priorities.” The company has been trimming management layers and reallocating resources toward high-growth areas like cloud infrastructure and AI-enabled services, despite reporting strong quarterly earnings.

The cuts follow a pattern of periodic workforce reductions at Microsoft, which has previously undergone similar restructuring during major strategic shifts toward cloud and AI. The latest round comes as other tech giants, including Alphabet and Amazon, have also announced layoffs or reorganizations as they recalibrate investments in AI and gaming.

Shares of Microsoft were down 0.8% in midday trading on the Nasdaq, but analysts largely viewed the move as a sign of discipline rather than distress. “Microsoft is optimizing for efficiency while doubling down on AI and cloud,” said a technology analyst at a major investment bank. “The Xbox restructuring signals a focus on profitability in gaming.”

Without a deal, the company would be forced into bankruptcy? No — Microsoft remains highly profitable, with $62 billion in revenue last quarter. The layoffs affect less than a quarter of the 1% total workforce reductions some competitors have made.

*Correction: An earlier version of this article incorrectly stated the percentage of workforce reduction. The correct figure is 2.1%.