Microsoft Layoffs: The Next Major Restructuring Initiative?

Microsoft Corp. shares rose by approximately 1% in overnight trading ahead of Wednesday's open, following a report that the Windows maker is planning another round of job cuts as early as next week to rein in costs. The latest job reduction move comes as the company struggles to maintain its market share and competitiveness in the increasingly cutthroat tech industry.

The report from Business Insider cited people familiar with the matter, stating that Microsoft could lay off around 2.5% of its workforce, which translates to approximately 5,700 jobs. This potential layoff would be in addition to the 6,000 roles that the company announced in June 2025, primarily affecting product and engineering teams. Microsoft's current workforce stands at around 228,000 full-time employees, as per the company's SEC filing last year.

The upcoming job cuts could be announced as early as next week, coinciding with the start of Microsoft's new fiscal year. However, the timing may be subject to change. Some affected employees are expected to be offered new roles immediately, according to the report. This move could be a strategic effort to retain key talent and expertise within the company, while minimizing the impact of the layoffs.

Microsoft has been one of the most aggressive companies in cutting jobs, describing the layoffs as a routine part of organizational restructuring amid shifting industry dynamics. The company has undergone significant workforce reductions in 2023 and 2024, along with smaller targeted cuts thereafter. This has led to a challenging period for Microsoft, with the company facing increased competition from Google, Anthropic, and OpenAI in the AI sector.

The development comes during a difficult stretch for Microsoft in the stock market. MSFT shares fell by 23% in the first six months of the year, marking their worst half-year performance since 2000 and the weakest showing among the Magnificent Seven stocks in the first half of 2026. Despite this decline, the retail sentiment for MSFT on Stocktwits has climbed upward since mid-last month, with many investors remaining bullish on the stock.

In a recent memo to Xbox employees, Senior Executive Asha Sharma outlined plans to 'reset the business,' which she described as being 'not in a healthy spot.' This move is seen as a crucial step in revitalizing the company's gaming division, which has been a key area of focus for Microsoft in recent years. The announcement of new job cuts may be a precursor to a more comprehensive overhaul of the company's operations and strategy.

The stock market's reaction to the potential layoffs is intriguing, with Microsoft's stock showing a surprising resilience in the face of uncertainty. As the company prepares to embark on another major restructuring initiative, investors will be closely watching how this move affects the company's future prospects and market performance.