What simply occurred? Microsoft is dealing with one of the crucial turbulent phases in its historical past, balancing large investments in synthetic intelligence and infrastructure with vital job cuts, making a local weather of uncertainty throughout the firm. On Thursday morning, CEO Satya Nadella addressed workers in a memo that immediately acknowledged the contradictions they’re experiencing.
“I wish to acknowledge the uncertainty and seeming incongruence of the instances we’re in. By each goal measure, Microsoft is prospering… and but, on the identical time, we have undergone layoffs,” Nadella wrote. He described navigating layoffs whereas reporting robust monetary outcomes because the “enigma of success in an trade that has no franchise worth,” emphasizing the unpredictable nature of technological transformation.
The layoffs have been intensive, with greater than 15,000 workers let go up to now in 2025, together with a big spherical of 9,000 in early July. These strikes symbolize among the most aggressive workforce reductions the corporate has applied in a long time. Whereas general headcount stays comparatively flat as a result of selective hiring, the dimensions of the cuts has unsettled the workforce and prompted troublesome questions on Microsoft’s tradition and course.
As the corporate pours sources into constructing capabilities for the AI age, President Brad Smith pointed to the dimensions of Microsoft’s capital expenditures as a key issue. Smith informed GeekWire in a latest interview that round $80 billion has been spent over the previous yr on information facilities, AI chips, and different essential infrastructure to keep up the corporate’s edge in synthetic intelligence. “Document capital expenditures… have put strain on the corporate to scale back working prices,” Smith stated.
With the speedy tempo of change, Nadella urged workers to concentrate on Microsoft’s core mission, which, he stated, should additionally evolve. He outlined a shift from being a “software program manufacturing unit” to constructing an “intelligence engine” that empowers everybody – not simply expertise professionals – to create their very own AI-powered instruments. Nadella emphasised that the corporate’s continued relevance depends upon adapting to new enterprise realities, studying new methods of working, and assembly altering buyer wants. “Progress is not linear. It is dynamic, generally dissonant, and at all times demanding. Nevertheless it’s additionally a brand new alternative for us to form, lead via, and have higher impression than ever earlier than,” he stated.
Nadella additionally spoke of the emotional burden that job eliminations have positioned on the corporate, describing them as “among the many most troublesome now we have to make.” He expressed gratitude to departing workers for his or her contributions.
In the meantime, inner and exterior commentary has raised issues that the present atmosphere could also be eroding the tradition of inclusion and empathy Microsoft constructed in recent times underneath Nadella’s management, with some longtime workers nervous a couple of return to extra aggressive, insecure instances.
Regardless of these headwinds, Microsoft continues to spend money on its future, ramping up hiring in essential AI-related roles and launching multi-billion-dollar initiatives to assist staff adapt to the calls for of the AI period. Nadella informed workers to anticipate extra particulars throughout the upcoming earnings and a future city corridor.
