GoKawiilMicrosoft CEO Satya Nadella talks with Indonesia's Minister of Communication and Information Technology Budi Arie Setiadi, on the day of their meeting with Indonesian President Joko WIdodo in Jakarta, Indonesia, on April 30, 2024.
Microsoft is eliminating 4,800 jobs, representing 2.1% of its workforce, with the company's Xbox division losing about one-fifth of its staff in the software giant's latest effort to cut costs in the era of artificial intelligence.
"The way technology is built, deployed, and used is transforming faster than at any point in my time here," Amy Coleman, Microsoft's chief people officer and a 27-year company veteran, wrote in a message to employees on Monday.
Xbox is cutting 3,200 people through fiscal year 2027, Xbox CEO Asha Sharma wrote in an email to division employees, noting that 1,600 roles would be axed on Monday. The other 1,600 exiting is on top of the companywide total of 4,800 leaving immediately.
"I recognize that a year-long restructuring creates additional challenges," Sharma wrote. "Unfortunately, it is not possible to make all the necessary changes in a single day."
The cuts amount to 20% of Xbox employees leaving, according to a person familiar with the matter, who asked not to be named in order to discuss internal changes.
"We will return to growth in 2027," Sharma wrote.
Microsoft has been the worst performer among megacap tech stocks so far in 2026, falling 19% as of Friday's close, as investors fear that generative AI models might displace wide swaths of enterprise software, while Microsoft's own AI models and services have yet to become big hits. Last year Microsoft conducted several rounds of layoffs, including one that cut 9,000 jobs.
While Microsoft recorded accelerating growth in cloud services and LinkedIn in recent quarters, it's lagging in other areas, such as Windows operating system licenses, Surface devices and the Xbox gaming unit, where revenue has been shrinking.