Microsoft is laying off 4,800 employees, representing 2.1% of its global workforce. The company is reallocating resources to fund a planned $190 billion in 2026 capital expenditures for AI and cloud infrastructure. This restructuring aims to improve efficiency while focusing on high-growth AI sectors.
The gaming division faces 3,200 job cuts as part of a major Xbox business reset. Microsoft will spin off or sell four studios: Compulsion Games, Double Fine, Ninja Theory, and Undead Labs. These changes follow underperformance in the Xbox division’s growth and profit margins.
Microsoft stock declined nearly 23% during the first half of 2026. Wolfe Research lowered its price target for Microsoft to $525 from $570 due to rising capital expenditure. Some analysts view the stock's weakness as a long-term opportunity supported by cloud business strength.