Tech giant Microsoft has begun laying off about 3% of its global workforce, amounting to thousands of jobs across different levels, teams, and geographies — even as the company continues to post strong earnings and sees its share price climbing to historic highs.
The company, which had 228,000 employees worldwide as of the end of last June, confirmed the decision on Tuesday, calling it a strategic move to streamline operations and “position the company for success in a dynamic marketplace.”
“We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson said in a statement to CNBC.
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Although the company did not disclose the exact number of roles being cut, 3% of its workforce suggests that nearly 7,000 employees will be affected. The layoffs are not performance-related, the spokesperson added, distinguishing them from a smaller round of cuts announced earlier this year that were based on employee performance.
This marks Microsoft’s largest layoff since January 2023, when the company eliminated 10,000 roles in response to what it then described as shifting economic realities and customer demand patterns.
Layoffs Amid Record Profits and Market Performance
What makes this latest wave of job cuts particularly notable is that it comes amid strong financial performance. Microsoft reported a $25.8 billion quarterly net income in April, surpassing analysts’ expectations, and issued an upbeat forecast for its future performance, especially in its AI-powered cloud services.
In fact, Microsoft’s stock closed Monday at $449.26, the highest price so far in 2025. This comes after a previous record close of $467.56 in July 2024, underlining the company’s continued strength on Wall Street.
Analysts say this latest restructuring is not driven by financial stress, but rather by organizational recalibration. A company spokesperson said that reducing layers of management is one of the primary objectives of the layoffs.
Nadella’s Push for Structural Reforms and AI Shift
The decision reflects a broader trend in Microsoft’s internal restructuring efforts. In January, CEO Satya Nadella indicated during an earnings call that the company would begin implementing sales execution changes, especially around Azure — Microsoft’s cloud platform. He noted that revenue growth outside of AI services had slowed, partly due to strategic shifts in sales incentives.
“How do you really tweak the incentives, go-to-market?” Nadella asked. “At a time of platform shifts, you kind of want to make sure you lean into even the new design wins, and you just don’t keep doing the stuff that you did in the previous generation.”
This aligns with Microsoft’s ongoing strategy to aggressively invest in artificial intelligence and consolidate operations that support this next-generation platform push. AI-driven services, particularly through Azure, have outperformed internal projections, while more traditional areas of the business face tightening margins and slower growth.
Part of a Broader Tech Sector Realignment
Microsoft’s announcement adds to a growing list of tech companies trimming their workforce this year, often despite strong balance sheets. Just last week, cybersecurity firm CrowdStrike announced that it would cut 5% of its workforce, citing efficiency realignment rather than poor performance.
This signals a continuing pattern of proactive restructuring among top-performing tech firms — one where profitability no longer guarantees job security, and the focus is shifting toward leaner operations tailored to new technologies like AI.
Microsoft, which remains at the forefront of enterprise cloud and generative AI solutions, appears to be doubling down on this direction. Analysts say the layoffs suggest a move to consolidate non-AI divisions, while aggressively reallocating resources toward AI, cloud, and future-facing products.
For a company that’s been consistently outperforming the market and driving the AI narrative in Silicon Valley, Microsoft’s layoffs point to a paradox shaping the tech economy: while innovation booms, the jobs behind older or less profitable segments are quietly being retired.
This restructuring may improve Microsoft’s margins and investor confidence in the short term, but it also echoes a familiar refrain from recent years, where tech employees, once shielded by boom cycles, are now vulnerable even when business is good.