SEATTLE, Washington: Microsoft is cutting about 4,800 jobs, or roughly 2.1 percent of its global workforce, as it reorganizes parts of its commercial and Xbox businesses while increasing investments in artificial intelligence infrastructure.

The software giant's shares were down 1.5 percent in early trading.

The layoffs make Microsoft the latest major technology company to reduce headcount as firms pour billions into AI while facing pressure to deliver returns. Amazon and Meta Platforms have also announced thousands of job cuts this year.

In a memo to employees, Chief People Officer Amy Coleman said AI was changing how work gets done by automating some routine tasks but stressed the layoffs were part of a broader restructuring. "I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done."

Microsoft announced the cuts on July 6 after its shares fell nearly 23 percent in the first half of 2026, marking their worst first-half performance since 2022.

Earlier this year, the company offered voluntary buyouts to about 9,000 U.S. employees, roughly 7 percent of its U.S. workforce. Microsoft frequently adjusts staffing near the end of its fiscal year in June as it prepares spending plans for the new fiscal year.

"Microsoft has been managing down its workforce in order to pay for its AI investments. By keeping its headcount down, they have been able to accelerate revenue growth while maintaining the same margins," said Gil Luria, managing director of D.A. Davidson.

Demand for AI services has fueled growth in Microsoft's Azure cloud business, but the high cost of building data centers has weighed on cash flow. In April, Microsoft forecast Azure quarterly sales above Wall Street estimates while projecting US$190 billion in spending for 2026, far exceeding analysts' expectations.

The company is also restructuring its gaming business. Gaming division head Asha Sharma said last month the business required a "reset" after its profit margin fell to 3 percent.

"Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform and hardware subsidy, but our annual revenue has declined nearly half a billion during that time," she said in a memo published on Microsoft's website. "Going forward, this cannot continue."

Microsoft is also considering options for its Xbox gaming unit, including a potential spinoff or restructuring as a wholly owned subsidiary, according to a report by The Information last month.