Microsoft Eliminates 4,800 Positions, Xbox Division to See Major Reductions

Microsoft will cut 4,800 positions, with the Xbox division experiencing the largest losses. The company aims to improve efficiency and reduce management layers to boost competitiveness. Xbox's gaming business has seen declining revenue.

MSFT is cutting 4,800 jobs, about 2.1% of its global workforce, in cuts announced July 6 . Xbox is bearing the brunt: CEO Asha Sharma said roughly 3,200 of the reductions will hit Microsoft Gaming through fiscal 2027, including about 1,600 immediate role eliminations, in what she called the most significant restructuring in Xbox's history.

Sharma, who became CEO of Microsoft Gaming in February 2026 after longtime Xbox chief Phil Spencer's departure, said Xbox studios have been operating at margins 3 to 10 times lower than comparable platform and publishing businesses, with some titles losing 64 cents for every dollar invested in development. As part of the reset, four internal studios are being moved out from under direct Xbox management. The cuts land as Microsoft keeps funneling record capital into AI data center buildout, adding pressure to trim costs in units that lag the company's cloud and AI growth.

For investors, the reshuffle highlights how gaming has become an outlier inside a company otherwise driven by Azure and AI. Watch for which studios end up under new leadership, whether game release schedules slip, and whether the margin reset actually narrows the gap with rivals like Sony and Nintendo over the next few quarters.

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