Microsoft is cutting up to 9,000 jobs in its latest move to realign toward artificial intelligence, with reports suggesting major layoffs in its Xbox division. While the tech giant ramps up its $80 billion investment in AI and data centers, employees across Redmond, Bellevue, and beyond face uncertainty.
Microsoft has confirmed it will cut as many as 9,000 jobs, marking its latest round of layoffs this year as the tech giant aggressively pivots towards artificial intelligence (AI).
The company did not specify which divisions would be affected, but reports indicate that the Xbox video gaming unit will likely see significant reductions.
Microsoft is currently channeling $80 billion (£68.6 billion) into massive data center infrastructure to power and train AI models. These facilities are essential to support the company’s broader AI ambitions, including services like Copilot.
A spokesperson told the BBC: “We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace.”
The upcoming job cuts represent approximately 4% of Microsoft’s global workforce, which stands at 228,000.
This is the fourth wave of layoffs initiated by Microsoft in 2025. In May, the company eliminated 6,000 roles across various departments.
According to an official database maintained by the state of Washington, more than 800 of these newly announced layoffs will occur in Redmond and Bellevue two major Microsoft hubs located in its home state.
Over the past few years, Microsoft has, like many of its tech peers, redirected its focus towards AI development. These changes include heavy investments in chip design and next-generation computing centers.
In a move that underscored its commitment, Microsoft brought on British AI pioneer Mustafa Suleyman to head its new Microsoft AI division in 2024.
A senior Microsoft executive recently remarked to the BBC that “the next 50 years will be fundamentally defined by artificial intelligence,” which will transform not only how we work, but also how we live and interact.
Microsoft has also invested heavily in OpenAI, the creators of ChatGPT, and holds significant equity in the company. However, media reports suggest that relations between the two firms have grown tense in recent months.
Bloomberg reported that Microsoft has faced difficulty in promoting its AI assistant, Copilot, to enterprise clients, as many users continue to favor ChatGPT for its simplicity and accessibility.
Meanwhile, Microsoft’s job cuts come at a time when U.S. tech firms are aggressively hunting top-tier AI talent.
Meta, the parent company of Facebook and Instagram, is forming a new “superintelligence” division and has reportedly lured engineers from rivals with eye-watering offers. Meta CEO Mark Zuckerberg is said to be personally involved in these recruitment efforts.
OpenAI’s CEO Sam Altman recently revealed that Meta has made signing bonus offers exceeding $100 million (£74.3 million) to attract key staff from his company.
Amazon, too, is reshaping its workforce. CEO Andy Jassy stated last month that AI innovations would replace some roles at the company.
As Microsoft balances a workforce reshuffle with massive AI ambitions, all eyes are on how the tech behemoth will navigate this seismic shift in the digital era.
