Microsoft will cut roughly 4,800 jobs, or about 2.1% of its workforce, as it doubles down on costly AI infrastructure and pursues efficiency across businesses. About two-thirds of the reductions will hit Xbox, where new gaming chief Asha Sharma said 3,200 roles will be eliminated across fiscal 2027, including 1,600 immediately, and four studios will shift to new ownership. The commercial division will also see cuts, according to an internal memo. The move follows voluntary buyouts offered earlier this year to roughly 7% of Microsoft’s U.S. staff and comes amid a 23% slide in the company’s shares in the first half of 2026. While AI demand is lifting Azure, rising data-center and component costs—including pricier memory chips—are pressuring cash flows and have contributed to higher Xbox console prices during a period of soft demand. Sharma said the gaming unit’s margin has narrowed to about 3% despite more than $20 billion in investment over five years (excluding Activision Blizzard King), prompting a reset that could include M&A.
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