Microsoft eyes another wave of layoffs that could hit 5,000 workers next week

Microsoft is expected to lay off up to 2.5% of its workforce as early as next week. 

The cuts, which could affect 5,000 employees, may impact sales, consulting and the Xbox gaming unit, according to a report from Business Insider Tuesday. 

The layoffs would mark the latest round of restructuring in the tech sector as companies continue to cut costs while directing more resources toward artificial intelligence (AI).

Last summer, Microsoft laid off roughly 4% of its workforce, or about 9,000 employees, in one of the company's largest rounds of job cuts in recent years. 

MICROSOFT ANNOUNCES ANOTHER ROUND OF LAYOFFS AFFECTING THOUSANDS OF WORKERS

According to Microsoft's latest annual filing with the Securities and Exchange Commission (SEC), the company employed roughly 228,000 full-time workers worldwide as of June 30, 2025. 

A 2.5% reduction in that workforce would amount to approximately 5,700 job cuts.

Sources said some employees affected by the latest round of layoffs will be offered new roles within the company immediately, Business Insider reported. 

MICROSOFT WILL LAY OFF NEARLY 6,000 EMPLOYEES IN PUSH FOR EFFICIENCY

In the past month, Microsoft’s stock slumped about 19%, marking one of its worst monthly performances since the dot-com crash.

Investor concerns have risen as Wall Street analysts warn that AI could eventually replace certain software services, which may include offerings from Microsoft. 

MICROSOFT PLANS ‘SUBSTANTIAL’ JOB CUTS ACROSS XBOX DIVISION

Last month, Xbox CEO Asha Sharma sent a memo to employees calling for a "reset" of the business after months of uneven performance. 

The Verge on Tuesday also reported that the gaming division is planning layoffs starting next week. The cuts are expected to be significant, with reductions to marketing and budgets, according to Bloomberg early last month. 

The restructuring could lead to studio closures, mergers, spin-offs and canceled game projects, the Verge reported. 

Xbox also recently raised prices on its gaming consoles by an additional $100 to $150 worldwide, citing increased demand for memory and storage driven by the AI boom. 

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Sources said the 2026 round of layoffs appears to be smaller after the company earlier this year introduced a voluntary retirement buyout program, which led to a significant number of employees exiting, according to BI.

Roughly one-third of eligible employees reportedly opted in.

Last year, Microsoft reportedly eliminated roughly 15,000 roles across multiple rounds of layoffs, including about 6,000 positions in May followed by 9,000 employees in July.

FOX Business reached out to Microsoft for more information.