Microsoft (MSFT) confirmed to CNBC on Wednesday that the tech giant was making small-scale job cuts across various departments, focusing on performance-based decisions. A Microsoft spokesperson explained that the company remained focused on nurturing high-performance talent, noting, “We are always working on helping people learn and grow. When people are not performing, we take the appropriate action.”
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MSFT’s New Layoffs Are Relatively Minor
Business Insider reported the layoffs earlier on Tuesday, with sources revealing that the cuts will affect less than 1% of the company’s workforce. At the end of June, Microsoft employed 228,000 people, making the current layoffs relatively minor in comparison to previous rounds of downsizing. In early 2023, Microsoft let go of 10,000 employees and streamlined its office leases. More recently, the company reduced its gaming unit workforce by 1,900 employees in January 2024 after closing its $75.4 billion acquisition of Activision Blizzard, intending to cut down on redundancies.
MSFT Focuses on Growth despite Layoffs
Despite the layoffs, Microsoft continues to be optimistic about its long-term growth potential. For instance, the company’s CFO Amy Hood recently predicted that Microsoft’s Azure cloud division would experience accelerated revenue growth in the first half of the year, driven by the increased demand for AI infrastructure.
Is Microsoft a Buy, Hold, or Sell?
Analysts remain bullish about MSFT stock, with a Strong Buy consensus rating based on 27 Buys and two Holds. Over the past year, MSFT has increased by more than 10%, and the average MSFT price target of $503.61 implies an upside potential of 18.6% from current levels.
