Microsoft Cuts Hundreds Of Jobs Amid Inclement Macro, Rising AI Capex Needs

The most recent cuts come following the 6,000 positions it eliminated in mid-May.

Microsoft Corp. (MSFT) has wielded its axe yet again, with the software company laying off hundreds of its workforce amid an uncertain economic climate and increasing investment needs to stay competitive in the artificial intelligence (AI) race. 

A Monday notice filed with the Washington State Employment Security Department showed that the Satya Nadella-led company has eliminated 305 permanent positions. 

The company's most recent cuts add to the 6,000 positions it eliminated in mid-May, attributing the action to the organizational changes necessary to best position itself for success in a dynamic marketplace.

In 2023, the company cut 10,000 jobs as it grappled with slowing demand amid a spike in inflationary pressure. In January this year, it cut a small percentage of jobs across the departments, calling them “performance-based” eliminations.

President Donald Trump’s tariffs, announced in early April, have weighed on economic growth, although Microsoft is relatively immune to the levies compared to its hardware counterparts.

Against this backdrop, flab cutting may be needed to meet the higher capex needs. On the third-quarter earnings call, CFO Amy Hood said that fourth-quarter capital expenditure will rise sequentially from the $21.4 billion spent in the previous three-month period.

On Stocktwits, retail sentiment toward Microsoft stock remained ‘bearish’ (39/100) by early Tuesday, and the message volume stayed ‘low.’

In Tuesday’s early premarket session, Microsoft stock slipped 0.34% to $460.422. The stock is up 10% year-to-date.

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