Microsoft cuts 15K jobs while investing $80B in AI infrastructure

Microsoft has eliminated approximately 15,300 employees—7% of its global workforce—in the first half of 2025 while simultaneously investing $80 billion in AI infrastructure. The dramatic workforce reduction coincides with CEO Satya Nadella’s revelation that up to 30% of Microsoft’s code is now written by AI, signaling a fundamental shift toward replacing human labor with artificial intelligence across the tech industry.

The numbers tell the story: Microsoft’s 2025 layoffs have been systematic and extensive, with software engineering bearing the brunt of cuts.

• The company announced 9,000 layoffs on July 2, following 6,000 cuts in May, 300+ cuts in June, and smaller performance-based reductions in January.
• Software engineering made up more than 40% of the roughly 2,000 positions cut in Washington state during the May round.
• Despite eliminating 7% of its workforce, Microsoft projects 14%+ revenue growth this year, demonstrating that revenue growth has become decoupled from headcount growth.

The $80 billion AI bet: Microsoft’s massive infrastructure investment reflects the computational requirements of modern AI systems and competitive pressures.

• More than half of the $80 billion investment will be in the United States, positioning the company for what Microsoft president Brad Smith calls a “golden opportunity” for American economic competitiveness.
• The investment represents a significant increase from Microsoft’s $53 billion capex spend in 2023.
• Microsoft’s Azure cloud services revenue increased 33% in the fiscal first quarter, with 12 percentage points stemming from AI services.

Industry-wide pattern: Microsoft isn’t alone in reducing human workforces while increasing AI investments.

• Meta announced 5% workforce cuts (about 3,600 employees) in January, with Mark Zuckerberg stating: “This is going to be an intense year, and I want to make sure we have the best people on our teams.”
• Google implemented a 10% reduction in managerial roles as part of its yearlong efficiency push.
• Amazon’s Andy Jassy was most direct about AI’s impact, telling employees: “we will need fewer people doing some of the jobs that are being done today.”

Beyond cost-cutting: Industry observers see these layoffs as “quiet AI layoffs”—cuts driven by the belief that AI can replace human labor rather than simple cost reduction.

• Technical roles bore the brunt of cuts while customer-facing positions were largely untouched, suggesting companies view AI as most capable of replacing technical rather than interpersonal work.
• Microsoft has mandated AI use across its workforce, making it part of employees’ daily workflow and performance evaluations.
• Microsoft CTO Kevin Scott predicts that AI-generated code could reach 95% by 2030, up from the current 30%.

What this means for workers: The implications for Microsoft’s workforce and knowledge workers broadly are profound.

• Paul Roetzer of the Marketing AI Institute calls it “quiet AI layoffs”—job cuts ostensibly about restructuring but actually driven by AI substitution.
• Employees can no longer assume strong performance will protect them from AI-driven displacement.
• Analyst Gil Luria told Reuters that Microsoft may continue laying off 10,000 workers annually to “make up for the higher depreciation levels due to their capital expenditures.”

The future workforce: Microsoft’s transformation represents one of the most aggressive restructuring campaigns in the company’s 50-year history.

• The 2025 workforce reduction surpasses all cuts since 2014’s elimination of 18,000 employees following the Nokia acquisition.
• Microsoft executives have reduced management layers between individual contributors and top executives.
• As Smith noted, the company sees AI infrastructure as “the essential foundation of AI innovation and use”—a foundation that increasingly doesn’t require as many human builders.