July 6 (Reuters) - Microsoft ( MSFT ) is cutting about 2.1%

of its workforce, or roughly 4,800 jobs, the latest in a wave of

tech layoffs as the Windows maker spends heavily on AI

infrastructure and uses the technology to improve efficiency

across its business.

Big Tech's historic AI outlays, set to top $700 billion this

year, are piling pressure on companies to show returns from the

technology and offset the rising cost of rolling it out across

their businesses. Amazon ( AMZN ) and Meta Platforms ( META )

have also laid off thousands of employees this year.

Microsoft ( MSFT ) announced the cuts on Monday following a rough

stretch, with its shares falling nearly 23% in the first six

months of 2026, their worst first-half performance since 2022.

The software giant earlier this year offered voluntary

buyouts to about 7% of its U.S. workforce, or about 9,000

employees. Microsoft ( MSFT ) often trims jobs near the end of its fiscal

year in June as it sets spending plans for the new year.

Booming AI demand has powered growth at Microsoft's ( MSFT ) Azure

cloud-computing business, which was the exclusive seller of

OpenAI's models until April, but the mounting cost of building

data centers to run those services is squeezing its cash flows.

The company, expected to report results later this month,

had in April forecast quarterly Azure sales above Wall Street

estimates, but also issued a $190 billion spending projection

for 2026 that massively surpassed expectations.

AI tools that can increasingly automate routine business

tasks have also emerged as a threat to its lucrative software

business, while a surge in memory chip prices driven by data

center demand has forced Microsoft ( MSFT ) to raise Xbox console prices

at a time when demand for the console was already soft.

The gaming division's new head, Asha Sharma, said last month

the business needed a "reset" and that its profit margin had

declined to 3%, forcing a restructuring that could include

potential M&A.

"Excluding Activision Blizzard King, over the past five

years, we have spent over $20 billion on ongoing investments in

our content, platform and hardware subsidy, but our annual

revenue has declined nearly half a billion during that time,"

she said in an outspoken memo to employees published on

Microsoft's ( MSFT ) website. "Going forward, this cannot continue."

The company is considering options for the Xbox gaming unit,

including a potential spinoff or restructuring ​as a wholly

owned subsidiary, the Information reported last month.