Microsoft (MSFT) Stock: What We Know About the Reported Layoffs

TLDR

• Microsoft plans to cut under 2.5% of its workforce, according to a Business Insider report, with the news breaking as early as next week.
• The cuts reportedly affect Xbox, sales, and consulting roles, going beyond the previously expected gaming division shake-up.
• Microsoft had about 228,000 full-time employees as of June 30, 2025, and has not confirmed the report.
• MSFT stock was up 1.21% as the news circulated.
• The move fits a wider 2026 tech trend, with Meta, Amazon, and Oracle all trimming headcount while boosting AI spending.

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Microsoft (MSFT) stock rose 1.21% as reports surfaced that the company plans to cut under 2.5% of its workforce. Business Insider broke the story Tuesday, citing sources familiar with the plans.

Microsoft Corporation, MSFT

The cuts could be announced as early as next week. Reuters said it could not independently verify the report.

Microsoft declined to comment when asked. That’s standard practice before layoffs are officially confirmed.

Based on the company’s headcount of roughly 228,000 full-time employees as of June 30, 2025, a 2.5% cut would mean thousands of jobs lost. The exact number remains unclear until Microsoft speaks publicly.

Which Teams Are Affected

Xbox layoffs were already expected. The gaming division has been under pressure for months after console price hikes and marketing cuts.

Microsoft raised Xbox console prices globally starting in August. The company blamed a worsening shortage of components, particularly storage and memory chips.

Bloomberg and The Information have both reported that Microsoft is weighing bigger changes to Xbox. That includes a possible spinoff or restructuring as a separate subsidiary.

But this round reportedly stretches further than gaming. Sales and consulting roles are also said to be in scope, according to Business Insider.

Those are customer-facing jobs that help close deals and support clients. Cutting them signals Microsoft may be rethinking how many people it needs to sell software in an AI-driven market.

The Bigger Picture in Tech

This wouldn’t be Microsoft’s first round this cycle. In July 2025, the company cut nearly 4% of its workforce, one of its largest layoffs in recent years.

The current reported cuts would be smaller by comparison. The timing also lines up with Microsoft’s fiscal year end on June 30, when budgets and team priorities typically get reviewed.

Microsoft isn’t alone in trimming staff this year. Meta has cut about 10% of its workforce, while Amazon confirmed 16,000 corporate job losses in January as part of a plan targeting 30,000 total reductions.

Oracle’s headcount fell by around 21,000 employees in fiscal 2026 during its own AI and cloud restructuring. Challenger, Gray & Christmas data shows AI was cited in 87,714 job cuts through May 2026, already topping all of 2025’s total.

Not everyone accepts the AI explanation at face value. Nvidia CEO Jensen Huang called the practice of blaming layoffs on AI “lazy,” arguing most companies haven’t scaled AI enough to justify sweeping cuts.

Gartner’s Helen Poitevin made a similar point, noting a May survey of 350 executives found no clear link between deeper staff cuts and better returns from AI tools. Cognizant’s Chief AI Officer Babak Hodjat has said AI sometimes gets blamed for overhiring that happened long before AI entered the picture.

OpenAI CEO Sam Altman has a name for this pattern: “AI washing.” It describes companies attributing decisions to AI that they may have made anyway for other reasons.

Microsoft has made no official statement confirming the layoffs as of this report.