A brief overview
- Microsoft announced its third layoff in 2025, cutting nearly 9,000 jobs, or about 4% of the global workforce.
- This downsizing reflects broader trends in the US technology sector as companies streamline their operations while investing heavily in artificial intelligence.
- The company plans to allocate up to $80 billion this year to bolster its AI infrastructure, and now accounts for the majority of the code generated by AI.
- Despite strong investments in AI, Microsoft and other tech giants are easing infrastructure build-outs as the pace of AI adoption slows down.
Microsoft announced its third round layoffs this year, cutting nearly 4% of the global workforce. This amounts to 9,000 jobs.
It marks the company's biggest cutbacks since 2023, reflecting broader trends across the US technology sector. There, businesses are streamlining their businesses while increasing their investment in artificial intelligence.
“This is part of the ongoing organizational changes that will help the company and team succeed in successfully in the dynamic market,” a Microsoft spokesperson said in an official statement. The company explained that it focuses on reducing the management layer and increasing employee productivity through new technology.
This marks Microsoft's second major layoff wave in 2025, following 7,000 job cuts in May. It's also the most important downsizing since 2023, since 10,000 positions were eliminated. As of July 2024, the company had 228,000 employees, according to its latest official report.
AI at the heart of reorganization
The main factor behind these changes is record-level investments in artificial intelligence infrastructure. Microsoft plans to allocate up to $80 billion this year to expand its data centers and deploy AI-powered services.
CEO Satya Nadella recently revealed that 20% to 30% of Microsoft's code is generated by AI, highlighting the company's shift to automation and efficiency as it pours billions into AI infrastructure.
The AI boom is slowing down
Microsoft is not only cutting back on work this year. Other tech giants like Meta, Bumble and Amazon have also taken similar steps. In fact, Amazon CEO Andy Jassy warned last month that AI will ultimately allow the company to reduce its workforce.
While investments in AI continue to be strong, companies including Microsoft are beginning to ease the pace of infrastructure build-outs. The early stages characterized by heavy spending on training models have been replaced by more targeted and cost-effective implementations. Microsoft is currently focusing on avoiding overinvestment in the AI revolution.
In this regard, the company has admitted that adoption of AI in the enterprise space is slower. Market data shows adoption rates are already high, but growth momentum has been tapering significantly in recent quarters.
Industry experts agree that the era of “easy profit” for AI is almost over. Future progress will depend not only on access to data and computing power, but also on deeper innovation. As data becomes narrower and infrastructure costs rise, the next wave of AI demands more than brute force scaling.
Ignacioteson
Economists and financial analysts
Ignacio Teson is an economist and financial analyst. He has over seven years of experience in emerging markets. He worked as an analyst and market operator for brokerages in Argentina and Spain.
