Microsoft said Wednesday it will lay off approximately 9,000 employees, affecting less than 4% of its global workforce, in a sweeping reorganization aimed at streamlining operations across divisions including gaming and cloud services. The announcement comes at the start of the company's 2026 fiscal year.
"We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace," a Microsoft spokesperson said in a statement.
The move follows a series of headcount reductions this year. In May, Microsoft slashed over 6,000 jobs, followed by at least 300 more in June. The company had already cut less than 1% of its headcount in January. Microsoft employed about 228,000 people globally as of June 2024.
Gaming chief Phil Spencer, in a memo to Xbox employees obtained by Variety, acknowledged that the cuts would impact various parts of Microsoft Gaming. "We will end or decrease work in certain areas of the business and follow Microsoft's lead in removing layers of management to increase agility and effectiveness," Spencer wrote. "These decisions are not a reflection of the talent, creativity, and dedication of the people involved."
The layoffs coincide with a broader cost discipline strategy within Microsoft, even as the company remains one of the most profitable in the S&P 500. In its March quarter, Microsoft reported $26 billion in net income on $70 billion in revenue, surpassing Wall Street expectations. Executives are forecasting 14% revenue growth in the June quarter, driven by expansion in Azure cloud services and enterprise software subscriptions.
Microsoft stock closed at a record high of $497.45 on June 26, though shares dipped about 0.6% early Wednesday as the S&P 500 held steady.
