Microsoft Layoffs: MSFT Cuts Up to 2.5% of Jobs, Targets Xbox and Sales Divisions

Microsoft is preparing another round of layoffs as it begins its 2027 fiscal year, with reports on June 30, 2026, indicating that up to 2.5% of its global workforce could be affected. The planned cuts are expected to focus on Xbox, sales, and consulting teams while the company continues investing heavily in artificial intelligence. 

The move highlights how even the world’s largest tech companies are reshaping their workforce to support long-term growth, making this development important for employees, investors, and the broader technology industry.

Microsoft Plans Fresh Layoffs Affecting Up to 2.5% of Workforce

Scale of the Job Cuts

Microsoft is preparing another round of layoffs that could affect less than 2.5% of its global workforce, according to reports published on June 30, 2026. The company employed about 220,000 people worldwide, meaning thousands of jobs could be impacted. The announcement is expected around the start of Microsoft’s new fiscal year on July 1, a period when the company has previously reorganized teams. 

MICROSOFT IS LAYING OFF 2.5% OF ITS STAFF, OVER 5,000 PEOPLE.

The fuller picture:

Microsoft has been the 6th largest H-1B filer in the country since 2020, bringing in foreign workers year after year even as it cuts American jobs.

Just months ago it pushed quiet buyouts on… pic.twitter.com/RFqPUSpTPs

— LayoffHedge (@LayoffAI) July 1, 2026

Reports indicate the layoffs will be smaller than last year’s reductions, and some affected employees may be offered alternative internal positions instead of leaving the company. Microsoft has not officially confirmed the reported plans but declined to comment. The move reflects ongoing efforts to control costs while continuing major investments in artificial intelligence infrastructure.

Which Microsoft Teams are Expected to Be Hit?

Why Is Xbox Facing Another Restructuring?

The Xbox gaming business is expected to be one of the hardest-hit divisions. Earlier reports suggested Microsoft planned major restructuring after its fiscal year-end. The gaming unit has struggled with weaker console demand and pressure to improve profitability. Reports also mention cuts to marketing budgets alongside workforce reductions as Microsoft resets its gaming strategy.

Which Sales and Consulting Roles are Under Pressure?

Sales and consulting teams are also expected to see significant reductions. Microsoft is streamlining operations while directing more resources toward AI, cloud computing, and enterprise software. 

Rather than reacting to weak business performance, the company appears focused on improving efficiency. This shift follows a wider trend across the technology industry, where businesses are reducing traditional roles while expanding AI-driven operations. The changes highlight Microsoft’s long-term focus on higher-growth business areas.

Why Microsoft Is Cutting Jobs Again?

Is AI Investment Driving These Layoffs?

Artificial intelligence remains Microsoft’s biggest spending priority. The company continues investing billions in AI infrastructure, cloud services, and advanced data centers. As these investments grow, Microsoft is reducing costs in other parts of the business to improve efficiency. This strategy mirrors actions taken by several large technology companies in 2026.

Strong cloud demand and AI adoption remain key growth drivers. However, rising capital spending has increased investor focus on profitability. According to Meyka, Microsoft’s long-term outlook remains supported by Azure growth despite short-term pressure from restructuring. Its AI stock analysis tool also highlights that cloud performance continues to outweigh challenges in the gaming business.

How does this compare with previous Microsoft Layoffs?

Microsoft has regularly adjusted its workforce over the past few years. In 2025, the company eliminated around 15,000 jobs, including about 6,000 positions in May and another 9,000 in July. 

The latest reported cuts are expected to be smaller but continue the same pattern of restructuring around the beginning of Microsoft’s fiscal year. The repeated workforce changes show Microsoft’s focus on balancing operating costs while expanding investments in AI and cloud technologies.

Market and Industry Impact 

The reported layoffs may strengthen Microsoft’s cost discipline, but investors will also monitor their impact on Xbox and employee morale. Meyka’s technical analysis suggests that MSFT remains under short-term pressure, while long-term fundamentals remain positive due to Azure growth and AI expansion. Other analysts also believe Microsoft’s cloud business continues to support its long-term outlook despite restructuring.

Conclusion 

Microsoft’s latest layoffs show the company is reshaping its workforce while accelerating AI and cloud investments. Although the reported cuts affect thousands of employees, they remain smaller than previous rounds.

For investors, Microsoft’s cloud business and AI strategy remain the bigger story, while employees and the gaming division will closely watch how the restructuring unfolds in the coming weeks.

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.