Microsoft to cut 9,000 more jobs as company accelerates push into AI

Microsoft has announced another wave of mass layoffs, confirming it will cut up to 9,000 jobs as part of its ongoing strategic shift toward artificial intelligence. The move marks the company’s fourth round of job cuts this year, bringing the total number of roles eliminated in 2025 to over 20,000.

The layoffs represent roughly 4% of Microsoft’s global workforce, which currently stands at around 228,000 employees. While the company has not specified which departments will be affected, reports indicate significant cuts within its Xbox gaming division, with several high-profile projects now canceled.

“We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson said in a statement.

The gaming division takes a hit

According to internal communications obtained by The Verge and IGN, the company has canceled two major video game projects. A reboot of the Perfect Dark franchise and Everwild, a fantasy title under development at Rare.

In addition, The Initiative, a studio created by Microsoft to lead the Perfect Dark project, will be shut down entirely.

Layoffs have also hit other major game studios owned by Microsoft, including Turn 10 Studios (Forza Motorsport) and ZeniMax Online Studios, the team behind The Elder Scrolls Online. Veteran ZeniMax director Matt Firor announced he will be stepping down after 18 years at the studio.

The ripple effects extended beyond Microsoft’s walls. Independent developer Romero Games, co-founded by DOOM creator John Romero, also laid off staff after its publisher pulled funding. Romero says the move was directly tied to Microsoft’s broader cutbacks.

“These people are the best I’ve ever worked with, and I’m sorry to say that our game and our studio were also affected,” Romero wrote on X (formerly Twitter).

A $80 billion bet on AI

The job cuts are part of Microsoft’s aggressive pivot toward artificial intelligence, a sector the company sees as its next major growth engine. Microsoft has committed $80 billion toward building massive new data centers and custom hardware to support AI model training and inference at scale.

This year, the company formed a new Microsoft AI division, led by Mustafa Suleyman, a co-founder of DeepMind and former CEO of Inflection AI. Microsoft’s broader AI ambitions include tighter integration of generative AI into its productivity software, cloud services, and developer tools.

“The next half-century will be fundamentally defined by artificial intelligence,” a top Microsoft executive recently told a popular publication.