July 1 marks the beginning of a new fiscal year for Microsoft, a date that has historically signified the announcement of job cuts within the company. Recent reports have pointed to expected layoffs in Microsoft’s Xbox division, raising concerns among employees and industry watchers alike.
Shares of Microsoft Corporation saw a modest rise of approximately 1% in overnight trading ahead of Wednesday’s open, following speculation that the tech giant is planning another round of job cuts as soon as next week. According to Business Insider, the company might eliminate about 2.5% of its workforce, potentially impacting around 5,700 jobs based on a reported total of roughly 228,000 employees.
This potential announcement aligns with Microsoft’s new fiscal year, though the timeline for final decisions remains fluid. The report indicates that some employees affected by the cuts may be offered new roles immediately following the layoffs.
Microsoft has taken a notably aggressive stance among major tech companies in terms of job reductions, describing these layoffs as a part of routine organizational restructuring amidst changing industry dynamics. After significant workforce cuts in previous years, the company revealed in June 2025 that it would eliminate around 6,000 roles, primarily within its product and engineering teams. This year, Microsoft also introduced a voluntary retirement program that attracted about one-third of the nearly 9,000 eligible U.S. employees.
In addition to broader workforce cuts, speculation has circulated regarding layoffs in the gaming division, particularly following Asha Sharma’s recent appointment as CEO of Xbox. In a leaked memo from last month, Sharma indicated a need to “reset the business,” which she characterized as being “not in a healthy spot.”
This announcement comes during a turbulent period for Microsoft’s stock performance. The company’s shares have plummeted approximately 23% in the first half of the year, representing their worst performance since 2000 and the lowest among other prominent tech stocks often referred to as the “Magnificent Seven.”
The drop in stock prices has been attributed to a general selloff in software stocks, heavy capital expenditure plans, and rising competition within the AI sector from companies like Google, Anthropic, and OpenAI. Notably, retail sentiment toward Microsoft has seen an upward trend on platforms like Stocktwits, with many posting bullish outlooks.
Analytical data shows that of 56 analysts covering the stock, 53 have rated it a ‘Buy’ or higher, with the remaining three marking it as ‘Hold.’ The average price target set by analysts stands at approximately $561.11, suggesting the potential for a 50% upside from the stock’s recent close.
With the looming job cuts and mixed market reactions, stakeholders will be closely monitoring upcoming announcements and developments from Microsoft in the days to come.
