Microsoft Plans to Cut Another 5,000 Jobs — Stock Still Rises 1.6% in Pre-Market

Microsoft (MSFT) is planning another round of layoffs next week, cutting less than 2.5% of its global workforce — roughly 5,000 to 5,500 roles. According to multiple reports, the cuts will primarily hit sales, consulting and Xbox. While the news broke on Wednesday, July 1, shares were up 1.62% in pre-market trading to $390.49 as of Friday, July 3, compared to the prior close of $384.28.^{[Fox Business]}

Layoff Scale and Divisions

According to Business Insider, Microsoft plans to cut less than 2.5% of its workforce, or roughly 5,000 to 5,500 positions. Layoff notices are expected to go out the week of July 6-10. Affected divisions include sales, consulting and Xbox.^{[BusinessLine]} Some laid-off employees will have the opportunity to find new roles within Microsoft.^{[New York Post]}

This is Microsoft’s third major layoff in a year. In May 2025, it cut roughly 6,000 roles; in July 2025, it cut roughly 9,000 roles, or about 4% of headcount at the time.^[GeekWire] By comparison, this round is smaller than last year’s.

There were already signs of trouble at Xbox. Microsoft’s Xbox business CEO Asha Sharma previously said the division was “in an unhealthy state” and needed a “reset.”^{[New York Post]} Xbox also recently raised console prices for the third time due to a global parts shortage, with increases of up to $150.^{[BusinessLine]}

AI-Driven Cost Restructuring

Multiple analysts note that this round of layoffs isn’t a sign of financial distress. Instead, Microsoft is reallocating capital from labor-intensive, lower-margin functions to capital-intensive AI infrastructure investments.^{[Crypto Briefing]} Microsoft’s capex on AI and cloud infrastructure is expected to exceed $100 billion this fiscal year (ending June 30).^[GeekWire]

In April, Microsoft launched its first-ever voluntary retirement program, targeting roughly 8,750 eligible U.S. employees — about 7% of its U.S. workforce. About a third of those eligible accepted the buyout, which helped reduce the number of forced layoffs in this round.^[GeekWire]

Industry Backdrop and Market Reaction

Microsoft’s layoffs are not an isolated case. In April 2026, Meta announced it would cut roughly 10% of its workforce. Amazon also plans to cut roughly 16,000 roles globally.^{[BusinessLine]} According to Challenger, Gray & Christmas, AI was the top reason cited for corporate layoffs for the fourth consecutive month in June 2026. Since 2023, AI has been cited in 173,600 layoff announcements.^{[New York Post]}

Despite the layoff news breaking on July 1, Microsoft’s stock didn’t take a hit in subsequent trading. As of pre-market on July 3, shares were up 1.62% at $390.49. However, the stock fell roughly 19% in June — its worst monthly performance since the dot-com bust in the early 2000s.^{[New York Post]}

Microsoft declined to comment on the layoff reports.^{[BusinessLine]}

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