Microsoft today announced they’re laying off 9,000 employees.  Depending on how dramatically you want to phrase it, that’s either 4% of their workforce or 1 in 25.

Last month, they laid off 6,000.  So in the last two months, Microsoft has trimmed their teams by nearly 7%, or 1 in 14.

“We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” a Microsoft spokesperson said, conducting a master class in saying absolutely nothing.  Perhaps they’re proactively evolving their internal structures to align with long-term strategic objectives in a rapidly changing environment, or maybe they’re  continuing their ongoing realignment efforts to focus on empowering teams to drive impact and unlock value in an ever-evolving business landscape.  They might even be taking the next step on their transformational journey to position the company to deliver sustainable success and stakeholder value.  Hard to say.

The Hidden Reason: AI.  But Not What You Think

There’s a popular narrative that as companies adopt AI, they slash white collar workforces.  This is not fiction.  For example, Salesforce has been crowing that they were able to lay off 1,000 people because of AI.

In Microsoft’s case, AI in the sense of “robots replacing humans” may be the cause of some of these 15,000 layoffs.  But there’s another, less obvious reason that AI is causing layoffs.

In short: AI is expensive.

Microsoft has been pouring billions into data centers, AI talent, electrical projects, even nuclear scientists in order to build out its vast AI projects.

Here’s a sample:

• $13+ billion spent on the OpenAI partnership
• $20 billion to buy Nuance, a speech recognition company
• $80 billion in investments in AI infrastructure…in 2025 alone

Microsoft’s revenue is $270bn (TTM), so dropping $80-110bn is not a drop in the bucket.

And the return on these investments is not immediate.  That’s not to say they’re bad investments, just that they can put a crimp on cash flow.  It’s like when a small two-man machine shop invests in a new piece of equipment.  Over the subsequent 5-10 years, that machine will pay off handsomely, but it still requires ready cash now to put it on the floor.

After spending all these billions, Microsoft has been under pressure from investors and analysts to put a lid on costs.  And the only way it can do that is via layoffs.

So when you see big tech laying people off, it’s not necessarily that robots are replacing workers.  It’s that robots are expensive, and these investments are straining their bottom line.

raindog308

Raindog308 is a longtime LowEndTalk community administrator, technical writer, and self-described techno polymath. With deep roots in the *nix world, he has a passion for systems both modern and vintage, ranging from Unix, Perl, Python, and Golang to shell scripting and mainframe-era operating systems like MVS. He’s equally comfortable with relational database systems, having spent years working with Oracle, PostgreSQL, and MySQL.

As an avid user of LowEndBox providers, Raindog runs an empire of LEBs, from tiny boxes for VPNs, to mid-sized instances for application hosting, and heavyweight servers for data storage and complex databases. He brings both technical rigor and real-world experience to every piece he writes.

Beyond the command line, Raindog is a lover of German Shepherds, high-quality knives, target shooting, theology, tabletop RPGs, and hiking in deep, quiet forests.

His goal with every article is to help users, from beginners to seasoned sysadmins, get more value, performance, and enjoyment out of their infrastructure.

You can find him daily in the forums at LowEndTalk under the handle @raindog308.