THE EMAIL NOBODY WANTED TO OPEN
On Monday, 6 July 2026, Microsoft announced it is immediately eliminating 4,800 jobs, about 2.1% of its workforce, in its latest effort to cut costs in the era of artificial intelligence. The pain is concentrated in one place. The Xbox division is losing about one-fifth of its staff, with 1,600 jobs cut on Monday itself and roughly 3,200 total planned through the 2027 fiscal year. Four gaming studios are being spun out of the company entirely. Xbox CEO Asha Sharma did not sugarcoat it either, calling this the most significant restructure in Xbox history and admitting plainly that "our business today is not healthy."
Here is the part that should make you sit up. This is not a struggling company trimming fat. Microsoft's chief people officer Amy Coleman said none of the terminated roles will be replaced by AI, while acknowledging in the same memo that "AI is changing how work gets done." And this is not a one-off. Microsoft laid off around 9,000 workers roughly a year ago, cut 3% of its workforce in May 2025, and in April 2026 offered voluntary retirement to 7% of its US staff, with more than 30% of eligible employees choosing to take it. The exits are becoming a permanent feature, not an emergency measure.
FOLLOW THE MONEY
So where is all the money going, if not to people? Straight into machines. Microsoft plans to spend $190 billion on infrastructure and data centers in 2026 alone. And it is not alone. Amazon, Microsoft, Alphabet and Meta plan to spend up to $725 billion combined on capital projects in 2026, a 77% increase year over year, going almost entirely into data centers, custom chips, GPUs and AI models. That is more money than most countries' entire economies, redirected into computing power in a single year.
The math behind the layoffs is colder than most people realize. Meta's projected 2026 capital spending runs $125 to $145 billion, while its entire human compensation bill, every salary, every benefit, every stock grant, comes to roughly $27 billion. Firing every single employee tomorrow would not even cover a fraction of the infrastructure check. In other words, the layoffs are not really the cost-cutting story. The layoffs are the financing. When Mark Zuckerberg cut about 8,000 employees, roughly 10% of Meta's workforce, he told staff the cuts were necessary because success is not guaranteed in AI. Payroll is simply the only cost flexible enough to be cut fast enough.
THIS IS NOT JUST MICROSOFT
Zoom out and the picture gets heavier. Nearly 158,000 tech workers have been laid off in 2026 so far, compared to over 245,000 in all of 2025, meaning this year is running well ahead of last year's pace. Data from TrueUp and Challenger, Gray & Christmas showed the first five months of 2026 running 33% above the same period in 2025, putting the industry on pace for a full-year total that could approach 370,000, close to the post-pandemic record of 430,000 set in 2023. Amazon cut 16,000 corporate jobs on 28 January 2026, following 14,000 in October 2025, about 9% of its corporate workforce in three months. Oracle disclosed in a June 23 filing that it cut 21,000 jobs over the past year, roughly 13% of its workforce, stating directly that the adoption of AI technologies across its operations has resulted in workforce reductions.
The pattern repeats everywhere. Salesforce CEO Marc Benioff said the company needed "less heads" because AI agents now handle the work, and 56% of layoff events this year explicitly cite AI, automation or machine learning as a driving force, affecting over 156,000 workers across 150 companies. One honest caveat worth knowing as a reader: Deutsche Bank analysts have flagged "AI redundancy washing" as a real 2026 trend, where companies blame AI for layoffs they would have made regardless. Some of this is genuine transformation. Some of it is a convenient excuse. Both are bad news if it is your name on the list.
THE TWIST NOBODY TALKS ABOUT
Here is where the story gets genuinely strange. While record numbers of workers were being cut, 275,000 AI-related job postings were sitting open in the United States at the same time as the record cuts, with companies reporting a 92% increase in AI-related hiring and a 56% wage premium on high-demand roles. The jobs did not disappear. They changed shape, and the workers being laid off, customer support, quality assurance, content moderation and middle management, are largely not the workers being hired, who are machine learning engineers and data infrastructure specialists. There is a canyon between the two groups, and most people cannot cross it fast enough.
The generational damage is already measurable. Stanford HAI data shows software developer employment for workers under 26 fell nearly 20% since 2024, which means the entry-level rung of the ladder is quietly being removed. And Bloomberg data suggests roughly half of AI-attributed layoffs will result in the same roles being rehired offshore or at lower salaries, making this a labour repricing story, not purely a labour reduction story. For investors, the uncomfortable truth is that markets love this. Fewer salaries, more compute, higher margins. The question is whether an economy where companies grow faster with fewer people can stay healthy long enough for those profits to matter.
WHAT ARE INVESTORS WATCHING
The stock to watch here is Microsoft (MSFT), because it is the cleanest test of whether this brutal trade-off actually works. The market has already voted once, and not kindly. Microsoft shares fell nearly 23% in the first six months of 2026, their worst first-half performance since 2022, and a 30% slide has wiped out roughly $1.2 trillion in market value over the past nine months. It is the worst performer among megacap tech stocks this year, as investors fear generative AI could displace wide swaths of its enterprise software business while Microsoft's own AI products have yet to become big hits.
Even the layoff announcement did not buy the stock any goodwill, as shares slipped 1% on Monday while the Nasdaq advanced 1%. MSFT now trades around $383 with a $2.85 trillion market cap, far below its 52-week high of $555.45, and the next earnings report lands on 28 July 2026. That report is the real event. If the $190 billion bet starts showing up as revenue, this becomes one of the great buying opportunities of the decade. If it does not, the firing was for nothing.
With 20 years of investment expertise, Caleb Gan is a seasoned professional in stock trading. The hard work and dedication were recognized when his partner and him were featured on Singapore TV Channel 9's MoneyWeek, a prominent financial program. He's also had the privilege to share insights on radio stations like 93.8Live, Capital 95.8FM, and 96.3FM through live interviews about stock market investments. Beyond that, he's also the co-founder of NDU System, where he continues to help others navigate the world of trading.
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