Microsoft lays off thousands of employees despite $25.8 billion in quarterly profits, largest layoffs since 2023

Microsoft has laid off 7,000 employees, impacting roughly 3% of its global workforce across departments, leadership levels, and regions.

“We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a company spokesperson told CNBC.

Microsoft Cuts 3% of Workforce, Largest Layoffs Since 2023

The move follows a strong earnings report just weeks ago, where Microsoft pulled in $25.8 billion in net income for the quarter and offered a positive outlook. Still, the company is making structural adjustments, echoing similar moves by other tech giants looking to trim layers and move faster.

At the end of June, Microsoft had 228,000 employees worldwide. The company hasn’t shared the exact number affected, but this is likely the biggest round of cuts since it eliminated 10,000 roles last year. In January 2024, Microsoft also laid off 1,900 employees across its gaming division, just a day after reaching a $3 trillion valuation.

Earlier this year, Microsoft made a smaller round of layoffs tied to performance. This latest cut is unrelated to performance, the spokesperson clarified. One of the goals is to flatten management — a shift that mirrors Amazon’s comments in January about removing “unnecessary layers.”

Microsoft isn’t alone. Last week, cybersecurity firm CrowdStrike announced it was cutting 5% of its workforce. In March, retail giant Amazon also announced plans to lay off 14,000 managerial positions to save $3.5 billion annually.

Back in January, CEO Satya Nadella pointed to changes in sales execution following slower-than-expected Azure cloud growth outside of AI. AI-driven cloud performance, on the other hand, beat projections. Nadella hinted at the need to rethink how Microsoft approaches incentives and go-to-market strategies during these platform shifts.

“How do you really tweak the incentives, go-to-market?” Nadella said. “At a time of platform shifts, you kind of want to make sure you lean into even the new design wins, and you just don’t keep doing the stuff that you did in the previous generation.”

Microsoft shares closed Monday at $449.26 — their highest level so far this year, and inching closer to the record $467.56 close from last July.