Microsoft has laid off approximately 15,000 employees over the past two months.
Company president Brad Smith said AI was not the primary cause, but rising capital costs and strategic realignments drove the decision.
Microsoft spent around $80 billion on capital investments in its last fiscal year, mostly to scale AI infrastructure.
Smith acknowledged that operating costs, mostly employee-related, had to be cut to fund long-term AI priorities.
He defended the layoff process as “difficult but necessary”, disputing claims of impersonal notifications.
Layoffs were business-driven, not based on individual performance, and came with above-industry severance.
Smith emphasized that laid-off employees remain highly qualified and encouraged others to hire them.
The job cuts sparked internal concerns about whether Microsoft is still living up to its values.
Despite the cuts, Microsoft committed $4 billion to global AI workforce development through its new Elevate program.
Smith acknowledged the contrast, saying it's about “prioritizing the future,” even if it doesn’t ease the personal toll.