Microsoft cuts 4,800 jobs, primarily targeting Xbox, to shift resources to AI

Microsoft announced it will cut approximately 4,800 jobs, representing 2.1% of its global workforce, as the tech giant shifts capital toward artificial intelligence and cloud infrastructure while using AI to improve business efficiency. The layoffs will heavily impact the Xbox gaming unit, which plans to eliminate 3,200 roles and divest up to five studios to boost returns after years of heavy investment. This restructuring follows a difficult period for Microsoft, with its shares falling nearly 23% in the first half of 2026, marking its worst first-half performance since 2022. Company officials stated that none of the terminated roles will be replaced by AI, emphasizing that the cuts are part of a broader effort to realign resources with the company's strategic priorities.