Microsoft is reportedly gearing up for extensive layoffs, potentially cutting between 11,000 and 22,000 positions across various divisions in the coming weeks. This move, if confirmed, would represent the company’s most significant workforce reduction to date and continue a pattern of January job cuts.
Mounting AI Investment Pressure
The substantial job cuts are primarily attributed to the soaring costs associated with artificial intelligence development and infrastructure. Microsoft has reportedly spent over $80 billion on AI initiatives last year, a pace of investment expected to accelerate. Analysts had previously suggested the need for annual workforce reductions of at least 10,000 roles to manage increasing depreciation expenses from expanding data center capacity.
Reallocation of Resources
Reports indicate that Microsoft is shifting spending from personnel costs towards long-term technology assets, particularly those enhancing its AI capabilities. This strategic pivot could place considerable pressure on middle management and teams focused on legacy products. Conversely, positions directly involved in AI research and core cloud operations are considered more secure as the company strives to maintain a competitive edge in the AI race.
Targeted Divisions and Future Policies
Job roles within the Azure cloud platform, the Xbox gaming unit, and global sales departments are cited as being most vulnerable. In parallel, Microsoft is also tightening its return-to-office policy. Starting February 23, 2026, employees residing within 50 miles of a Microsoft office will be mandated to work on-site at least three days per week, signaling a renewed emphasis on in-person collaboration.