At least one big tech firm is expected to announce a continuing series of layoffs due to AI investment plans.
Some AI firms have denied that recent job cuts are due to the diversion of resources towards expanding AI investments and internal rationalization of operations, while others have been upfront about the agenda.
One firm that is transparent about its plans is Microsoft. According to various reports, the firm is preparing another round of layoffs that would affect thousands of workers (estimated at 5,500) across sales, consulting, and the Xbox division.
The move is expected to be relatively small in percentage terms (2.5%), but it still amounts to a meaningful reduction because the firm has such a large global workforce (220,000 employees). However, that would still translate into several thousand roles, with the announcement possibly coming as soon as mid-July 2026.
People familiar with the matter say the reductions are part of the firm’s effort to keep costs under control while it continues to invest heavily in AI, demonstrated by recent shifting of resources towards AI infrastructure and related projects, which has already driven a series of workforce trims over the past year.
Sales and consulting are expected to be among the most affected business areas. Those functions often make up a large share of customer-facing and support roles, so even a modest percentage cut can have a broad impact on teams and projects.
The Xbox layoffs are expected to extend the pressure on the firm’s gaming business. Xbox has been under scrutiny as the firm reassesses operations and looks for ways to streamline across its entertainment portfolio. This would not be Microsoft’s first major workforce reduction in recent months. Last year, it had carried out larger cuts, and the latest round appears to be another step in a longer effort to reshape the organization while funding its AI ambitions.
Sources indicate the possibility that some affected employees may be offered alternative positions right away, which could soften the impact for a portion of staff. Even so, the message from the firm is clear: It is still trimming and refocusing as it pushes deeper into AI.
