Microsoft prepares another round of layoffs affecting sales and Xbox units

Microsoft planned another round of layoffs affecting under 2.5% of its workforce, with sales, consulting and Xbox jobs among the roles most exposed. The cuts amount to thousands of positions at a company that had 228,000 full-time employees as of June 30, 2025, and Microsoft declined to comment.

Microsoft will keep investing in capital expenditures to support cloud growth and its AI infrastructure and training, and it separately disclosed plans to spend $80 billion in fiscal 2025 on AI data centers.

In July 2025, Microsoft announced about 9,000 job cuts, or less than 4% of the workforce, after earlier cuts in January, May and June of that year that included more than 6,000 positions in May and at least 300 in June. The company was trying to reduce management layers.

After the July 2025 cuts, Xbox chief Phil Spencer told employees the changes were meant “to position Gaming for enduring success” and to focus on strategic growth areas. Microsoft Gaming had also faced budget pressure and organizational review as the company pushed capital into AI.

Fiscal 2025 revenue rose 15% to $281.7 billion and operating income increased 17% to $128.5 billion, while Azure revenue topped $75 billion for the first time, up 34%. In the fourth quarter, revenue reached $76.4 billion, Microsoft Cloud revenue was $46.7 billion, and Xbox content and services revenue rose 13%. Cloud gross margin fell to 69% because of the cost of scaling AI infrastructure, even as operating expenses rose on cloud and AI engineering and Gaming.