Microsoft (MSFT) Doubles Down on AI—While Axing Jobs in Brutal Tech Pivot

Redmond's gambit: Bet the farm on AI while trimming human 'redundancies.'

Subheader: The Azure giant's playbook—automate first, ask questions later

Satya Nadella's laser focus on AI infrastructure comes at a brutal human cost—another 5% workforce reduction just cleared SEC filings. Because nothing says 'strategic realignment' like pink slips and server racks.

Wall Street's already pricing in the cognitive dissonance—MSFT shares hit $420 post-announcement because apparently layoffs are still the ultimate 'productivity hack.'

TLDR

• Microsoft stock rose 1.58% to $498.84 amid organizational restructuring and a stronger AI focus
• 9,000 employees to be laid off, or under 4% of the global workforce
• Employees will now be evaluated on internal AI tool usage, including GitHub Copilot
• Q3 FY2025 revenue hit $70.1B, with net income near $26B
• MSFT targets 14% year-over-year revenue growth in the June quarter, led by Azure and software sales

Microsoft Corporation (NASDAQ: MSFT) ended trading on July 3 at $498.84, up 1.58% for the day.

Microsoft Corporation (MSFT)

The rise follows an internal reorganization initiative, AI-focused performance mandates, and a new round of layoffs. As the company begins fiscal 2026, it’s making sharp pivots to bolster efficiency and expand its competitive edge in artificial intelligence.

AI Use Now Tied to Employee Performance

Julia Liuson, head of Microsoft’s AI tools and services, directed managers to evaluate staff based on their adoption of internal AI tools. This is part of Microsoft’s broader effort to drive usage of its Copilot offerings across departments. The MOVE responds to slower-than-expected internal adoption rates, even as the company positions itself at the forefront of enterprise AI integration.

Microsoft Corp (MSFT) Pushing for More Internal AI Adoption https://t.co/Zov5k91TOJ

— Zicutake USA Comment (@Zicutake) July 3, 2025

To support flexibility, Microsoft has permitted employees to use external AI tools, such as Cursor, if they meet the company’s security criteria. With GitHub Copilot facing rising competition, this approach may foster innovation while improving productivity.

9,000 Layoffs to Streamline Operations

In a significant organizational change, Microsoft will lay off roughly 9,000 employees. This represents just under 4% of its workforce and affects various departments and geographies. These layoffs follow earlier cuts, 6,000 in May and at least 300 in June, and reflect a desire to remove management layers and increase execution speed.

Phil Spencer, CEO of Microsoft Gaming, explained the move aims to position the division for long-term success by streamlining operations and exiting non-strategic areas. Management expects these actions to improve responsiveness in a rapidly evolving market.

Strong Financials Despite Restructuring

Despite the layoffs, Microsoft remains one of the most profitable companies in the S&P 500. The company generated $70.1 billion in revenue and nearly $26 billion in net income in the fiscal third quarter of 2025. Executives project 14% year-over-year revenue growth in the June quarter, driven largely by Azure cloud services and software subscriptions.

Performance metrics also support the stock’s long-term strength. MSFT has gained 18.8% year-to-date and 152.43% over five years, outpacing the S&P 500 in the long run. However, the one-year return lags at 9.09%, compared to the index’s 13.41%, suggesting short-term volatility amid restructuring.

Hedge Fund and Analyst Sentiment Remains Strong

Despite recent internal shifts, Microsoft remains a top holding among hedge funds, appearing in 284 portfolios as of the end of Q1 2025. Qualivian Investment Partners noted MSFT as a key contributor to their portfolio’s Q1 gains, citing its post-earnings recovery and strategic AI investments.