Microsoft is cutting about 2.1% of its workforce, or roughly 4,800 jobs, the latest in a wave of tech layoffs as the Windows maker spends heavily on AI infrastructure and ​uses the technology to improve efficiency across its business.

Microsoft announced Monday that it is laying off 20% of its Xbox workforce and is cutting ties with several game studios as part of larger shakeup.

The next round of Microsoft layoffs align with the start of new fiscal year on July 1. These job cuts follow a pattern of fiscal-year restructuring.

The Xbox restructuring will involve divestment of four studios, Xbox's new head, Asha Sharma, said in a note to employees.

Microsoft is reportedly preparing another round of layoffs that could affect thousands of employees across sales, consulting and Xbox as it continues investing heavily in AI.

The Microsoft layoffs are set to affect 4,800 jobs, with 3,200 in Xbox. Four studios are on their way out intact, with a fifth under review.

The layoffs are not the catalyst; the setup is that the market is pricing in AI capex pain and AI disruption at the same time. Wolfe’s capex/FCF cut is real, but the stock is already down ~18% YTD, leaving room for a “capex growth slowing + Azure acceleration” earnings surprise on July 29.

Microsoft’s latest layoffs coincide with a rise in H‑1B filings, intensifying scrutiny of its AI‑driven workforce shift.