The Hidden Cost of AI: Microsoft's $190 Billion Bet Leads to 4,800 Job Cuts

The cuts affect about 2.1% of Microsoft’s workforce, hitting commercial operations and the Xbox division. Microsoft says these jobs aren’t being replaced directly by AI but the company’s enormous AI spending is clearly driving the pressure. Azure continues to grow rapidly, yet building the infrastructure to power AI is becoming incredibly expensive. Microsoft now expects to spend $190 billion in 2026, a figure that shocked analysts and highlights just how costly the AI race has become. Xbox is feeling the squeeze too. Hardware costs have climbed, console demand has cooled, and even heavier investment in games hasn’t delivered the revenue boost Microsoft hoped for. Reports suggest Xbox operating margins are hovering around 3%.

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