- Microsoft is reportedly preparing for thousands of layoffs in January 2026.
- It is said that the Azure, Xbox, and sales divisions will be impacted most by these job cuts.
- Sources suggest Microsoft’s AI investments are primarily to blame for the layoffs.
Microsoft has been among the companies at the forefront of the AI revolution, investing billions of dollars into the technology. As part of this endeavor, the tech giant has pushed AI features across all its offerings, including the massively popular Windows platform.
However, this focus on AI has also come at a cost. The last year saw Microsoft reduce its workforce considerably following multiple rounds of layoffs. It seems this isn’t stopping any time soon, as rumors suggest more layoffs are on the way.
Why it matters: Last year’s layoffs led to Microsoft letting go of 15,000 workers. At the same time, the company’s financials improved drastically, setting the stage for more layoffs.
The latest report comes courtesy of Tipranks via Resetera, which states that a new round of job cuts could come from the company as soon as January. Current estimates suggest up to 22,000 workers could lose their jobs.
The report states that an official announcement could be made during the third week of January. In particular, the Azure cloud teams, the Xbox gaming division, and the global sales department are expected to be hit the hardest by these job cuts.
Meanwhile, Microsoft will continue moving forward with its AI-focused investments. The gaming giant is said to be heavily spending on data centers and other AI-focused tools as it looks to the future.
Because the Xbox division has been hit quite hard in the past by layoffs, this report does not bode well for Microsoft’s gaming division. Previously, the gaming giant even shut down various first-party teams as part of its layoffs.
Between Halo, Forza, and Gears coming back, 2026 is expected to be a huge year for Xbox, so it would be a true shame to see the excitement sullied by the news of division-wide job cuts.
What do you think about Microsoft cutting even more jobs in 2026? Do you think its investment in AI technology will pay off in the long run? Let’s discuss in the comments and on the Tech4Gamers Forums.
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[Senior News Reporter]
Avinash is currently pursuing a Business degree in Australia. For more than 5 years, he has been working as a gaming journalist, utilizing his writing skills and love for gaming to report on the latest updates in the industry. Avinash loves to play action games like Devil May Cry and has also been mentioned on highly regarded websites, such as IGN, GamesRadar, GameRant, Dualshockers, CBR, and Gamespot.
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