Microsoft is set to lay off approximately 4,800 employees worldwide, marking about 2.1 percent of its global workforce. This decision comes as the technology giant intensifies its investment in artificial intelligence (AI) and aims to expand its business through AI-driven innovations. According to Reuters, Microsoft announced the layoffs on Monday, a move that contributed to a decline in its stock price, which has dropped nearly 23 percent in the first half of 2026.

This represents the company's worst stock performance since 2022. Earlier this year, Microsoft had also offered voluntary buyouts to 9,000 employees in the United States. Microsoft conducts an annual review of its workforce structure after the fiscal year ends in June, to plan for the upcoming financial year.

Industry analysts view this round of layoffs as part of that regular process. The layoffs at Microsoft parallel similar actions by other major tech companies such as Amazon and Meta, which have also reduced their workforce by thousands in 2026. The surge in AI demand has notably boosted Microsoft’s Azure cloud business.

Until April, Azure held exclusive rights to sell OpenAI's models, significantly increasing the company’s revenue. However, building AI infrastructure requires substantial investment in data centers, leading to rising costs and pressure on profitability. An industry expert noted, "The rapid expansion in AI capabilities demands heavy capital expenditure, and companies like Microsoft are balancing these costs with the need to maintain financial health." Microsoft's strategic focus on AI, while driving business growth, has necessitated these workforce adjustments to control expenses and enhance efficiency.

Analysts estimate that global AI-related investments by major tech firms could exceed $700 billion in 2026. The layoffs signal a broader trend in the technology sector, where companies are recalibrating their workforce and operations to align with the evolving demands and financial realities of AI-driven markets. As Microsoft continues to invest heavily in AI, it will likely maintain a focus on cost management to sustain long-term growth and shareholder value.