Driven by the AI boom, Microsoft lays off 9,000 employees

Quick overview

Microsoft has announced its third round of layoffs this year, cutting nearly 4% of its global workforce—equivalent to 9,000 jobs.

It marks the company’s largest headcount reduction since 2023 and reflects a broader trend across the U.S. tech sector, where companies are streamlining operations while ramping up investment in artificial intelligence.

“This is part of our ongoing organizational changes to better position the company and our teams for success in a dynamic market,” a Microsoft spokesperson said in an official statement. The company explained that it is reducing layers of management and focusing on boosting employee productivity through new technologies.

This marks Microsoft’s second major wave of layoffs in 2025, following 7,000 job cuts in May. It’s also the most significant downsizing since 2023, when 10,000 positions were eliminated. As of July 2024, the company had 228,000 employees, according to its latest official report.

AI at the Center of Restructuring

The primary driver behind these changes is a record-level investment in artificial intelligence infrastructure. Microsoft plans to allocate up to $80 billion this fiscal year to expand its data centers and roll out AI-powered services.

CEO Satya Nadella recently revealed that 20% to 30% of Microsoft’s code is now being generated by AI, underscoring the company’s shift toward automation and efficiency as it pours billions into AI infrastructure.

The AI Boom Slows Down

Microsoft isn’t alone in cutting jobs this year. Other tech giants like Meta, Bumble, and Amazon have taken similar steps. In fact, Amazon CEO Andy Jassy warned last month that AI would eventually allow the company to reduce its workforce.

While investment in AI remains strong, companies—including Microsoft—are beginning to moderate the pace of their infrastructure buildouts. The initial phase, marked by heavy spending on training models, is giving way to more targeted and cost-efficient implementations. Microsoft is now focused on avoiding overinvestment in an AI revolution that may not unfold as dramatically as once projected.

In this regard, the company acknowledged that AI adoption in the enterprise space is slowing. Market data shows that adoption rates are already high, but the growth momentum has noticeably tapered off in recent quarters.

Industry experts agree that the era of “easy gains” in AI is largely over. Future progress will depend not only on access to data or computing power but also on deeper innovation. As data becomes scarcer and infrastructure costs rise, the next wave of AI breakthroughs will demand more than brute-force scaling.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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