Is the cost of the AI high-stakes gamble too heavy? Microsoft has 'third round of layoffs in a year' cutting 5,500 people, with Xbox becoming the hardest-hit area.

Behind the AI frenzy lies the tears and blood of tech employees. According to a report by the New York Post today (1st), Microsoft is preparing to launch its "third round" of large-scale layoffs in the new fiscal year over the past year, with nearly 5,500 people expected to face unemployment. Sales and Xbox departments are the hardest hit. While splashing $190 billion on AI infrastructure, Microsoft's stock price plummeted 19% in June, the worst record since the dot-com bubble, forcing executives to wield the layoff axe again. (Previous: AI computing power is an energy monster! Chevron wins 20-year deal with Microsoft to build dedicated natural gas power plant, first power online in 2028) (Background: Microsoft CEO warns AI is replicating the tragedy of globalization; every company must accumulate 'human capital' + 'token capital') Table of Contents Toggle

• Sales and Xbox take the hardest hit; early retirement plan eases impact
• The $190 billion AI gamble triggers investor panic
• Microsoft layoff timeline and global AI layoff impact
• AI becomes the 'number one culprit' of tech layoffs While sprinting towards dominance in artificial intelligence (AI), Microsoft's internal pain period seems far from over. According to the New York Post citing sources from Business Insider, Microsoft is expected to officially announce a new round of layoffs next week. This will be Microsoft's 'third round' of major layoffs in the past year. The number of affected employees is estimated to be below 5,500, accounting for about 2.5% of the company's global workforce of 220k.

Sales and Xbox take the hardest hit; early retirement plan eases impact

According to insiders, the layoffs will be concentrated in the company's sales and consulting departments and the Xbox gaming division, which has been deeply mired in operational difficulties. To mitigate the impact of forced layoffs, Microsoft earlier this year launched a 'voluntary retirement buyout program (for employees whose years of service plus age equal or exceed 70)' for US employees. At that time, about 9,000 people were eligible, and one-third chose to accept it, keeping the number of forced layoffs this round below 5,500. Regarding Xbox's difficulties, new Xbox CEO Asha Sharma recently admitted that the company is 'not in a healthy state.' Due to AI data centers' massive demand crowding out chip production capacity, hardware costs have been rising, forcing Xbox to repeatedly raise hardware prices (the latest increase was as high as $150) and successively close studios and cancel games in development.

The $190 billion AI gamble triggers investor panic

Behind Microsoft's continuous downsizing lies the market's strong concern about tech giants' 'out-of-control AI spending.' Microsoft has pledged to invest a staggering $190 billion in next-generation AI infrastructure over the next few years. However, the rapid advancement of AI technology also puts Microsoft's traditional software tools at risk of obsolescence. This contradiction of 'burning money on one hand to invest while cannibalizing traditional revenue on the other' is directly reflected in the capital market. In the past June, Microsoft's stock price was battered, plunging 19% in a single month, the worst monthly performance since the burst of the dot-com bubble in the early 2000s.

Microsoft layoff timeline and global AI layoff impact

| Timeline / Indicator | Number of layoffs and data | Background description | | --- | --- | --- | | May last year (Round 1) | 6,000 people | Preliminary downsizing in response to post-pandemic growth slowdown. | | July last year (Round 2) | 9,000 people | About 4% of the then total workforce, began resource restructuring. | | This week/next week (Round 3) | Estimated < 5,500 people | Focus on sales, consulting, and Xbox departments, in response to AI's massive capital expenditure pressure. | | Global AI layoff impact | Cumulative nearly 174,000 people | Total number of global jobs lost since 2023 due to AI transformation or displacement. |

AI becomes the 'number one culprit' of tech layoffs

Microsoft's current situation is just a microcosm of the entire tech industry. According to a latest report from research firm Challenger, Gray & Christmas, nearly one-third of global layoffs so far this year have been concentrated in the tech sector; more alarmingly, as of June, 'artificial intelligence (AI)' has been the top reason for corporate layoff announcements for four consecutive months. As AI data center construction proceeds at full speed, large amounts of chips and resources are being diverted, forcing traditional departments (such as consumer hardware and software sales) to downsize to balance their books. This tech industry restructuring triggered by AI, along with the resulting wave of unemployment and hardware inflation, may have only just begun.