Microsoft is laying off up to 5,000 workers next week—roughly 2.5% of its workforce—across sales, consulting, and the Xbox division as the company refocuses on artificial intelligence. The cuts follow a 19% monthly stock decline driven by investor concerns that AI could replace some Microsoft software services, and they continue a pattern of restructuring that eliminated roughly 15,000 roles last year.
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Microsoft is expected to lay off up to 2.5% of its workforce as early as next week, affecting approximately 5,000 employees across sales, consulting, and the Xbox gaming unit. Some affected employees will be offered new roles within the company. Xbox CEO Asha Sharma recently called for a "reset" of the business, and the gaming division is planning significant cuts to marketing and budgets, with potential studio closures, mergers, spin-offs, and canceled game projects.
Why it matters
This marks the latest round of restructuring as Microsoft redirects resources toward artificial intelligence while managing costs. Wall Street analysts have warned that AI could eventually replace certain software services, raising investor concerns that contributed to Microsoft's stock slumping about 19% in the past month. The layoffs come after the company eliminated roughly 15,000 roles across multiple rounds last year.
What to watch
The 2026 round of layoffs appears smaller after the company introduced a voluntary retirement buyout program earlier this year, with roughly one-third of eligible employees opting in. Xbox recently raised prices on gaming consoles by an additional $100 to $150 worldwide, citing increased demand for memory and storage driven by the AI boom.
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