Microsoft Stock Hits All-Time High Amidst Planned Layoffs

Microsoft's stock price reached a new all-time high on Wednesday, driven by reports that the company is planning to lay off thousands of employees, primarily in the sales department. This move is aimed at balancing the significant investments being made in artificial intelligence, which have led to substantial expenditures. The layoffs are expected to be announced at the beginning of next month, coinciding with the end of Microsoft's fiscal year. These job cuts will not only affect the sales team, and the specific timing may still change.

This round of layoffs follows a previous round in May, which involved 6,000 people, with the most affected positions being in product and engineering. Customer-facing service roles, such as sales and marketing, were relatively less impacted. In April, the company informed employees of its plan to expand its software sales to small and medium-sized customers through third-party companies. Microsoft stated that it will regularly reevaluate its organizational structure to ensure that its investments are focused on achieving growth. As the company has invested billions of dollars in servers and data centers, executives made commitments to Wall Street and warned employees that they would control spending in other areas.

As of the end of June 2024, the company has a total of 228,000 employees, of which 45,000 are engaged in sales and marketing work. Microsoft typically reorganizes its teams and announces other changes close to the end of its fiscal year. The layoffs are seen as a necessary measure to offset the costs of AI investments and ensure the company's financial stability while continuing to innovate in the AI sector. Despite the anticipated job cuts, Microsoft's stock price rose by approximately 0.5% on Wednesday, reaching 480.24 USD. This increase comes as part of a broader strategy to balance the significant investments being made in AI, which have led to substantial expenditures.

Microsoft's move to lay off thousands of employees is part of a broader trend among large technology companies. Many of Microsoft's peers, including Alphabet and Amazon, have also taken similar measures to reduce their workforce. In the past week, Alphabet announced a voluntary separation program for employees in multiple departments, including knowledge and information, central engineering, and marketing, research, and communications teams. This trend is driven by the need to balance the significant investments being made in AI, which have led to substantial expenditures and reduced profit margins. Companies are forced to push for layoffs to maintain financial stability while continuing to innovate in the AI sector.

Microsoft's significant investment in AI is evident in its financial reports. In April, the company announced its plan to invest 800 billion USD in infrastructure by the end of the 2025 fiscal year. This investment is aimed at expanding the company's capabilities in AI and other emerging technologies. However, such large-scale investments have put pressure on the company's profit margins, forcing it to take measures to reduce costs. The layoffs are seen as a necessary measure to offset the costs of AI investments and ensure the company's financial stability while continuing to innovate in the AI sector. Despite the anticipated job cuts, Microsoft's stock price has risen by approximately 14% year-to-date, making it one of the best-performing stocks among the seven largest technology companies in the United States.