Inside Microsoft’s 2025 Layoffs: CEO Satya Nadella Addresses the AI-Driven Transformation

In a candid memo to employees dated July 24, 2025, Microsoft CEO Satya Nadella addressed the recent sweeping layoffs happening at the tech giant, a move that has seen over 15,000 jobs cut globally this year. Nadella acknowledged the emotional weight of these decisions, emphasizing their difficulty and the impact on colleagues and friends across the company.

The layoffs represent about 7% of Microsoft's global workforce and mark the largest reduction since 2014. Despite these cuts, Microsoft continues to thrive financially, hitting record highs with its stock price soaring above $500 per share in early July and reporting $75 billion in net income over the last three fiscal quarters.

Nadella described this period as an "enigma of success," pointing out the paradox of ongoing job reductions during a time of unprecedented corporate growth. He highlighted that headcount remains "relatively unchanged" year-to-date because the company is simultaneously investing heavily and hiring in new areas aligned with its AI ambitions.

Microsoft’s strategic focus is shifting dramatically toward artificial intelligence (AI) and cloud infrastructure, with capital expenditures reaching historic highs. The company has poured more than $80 billion into AI in the recently ended fiscal year, reflecting its commitment to becoming an "intelligence engine" that empowers individuals and organizations to create their own tools and solutions.

In his memo, Nadella encouraged employees to embrace a "difficult process of unlearning and learning" to adapt to the evolving technological landscape, signalling a cultural transformation alongside the structural changes.

He further explained the need to "reimagine Microsoft’s mission for a new era," underscoring that the company is moving beyond traditional software development to build AI-driven tools that universally empower productivity and creativity.

While the layoffs have undoubtedly created uncertainty and grief within the workforce, Nadella’s message framed them as part of a larger, necessary transformation to maintain Microsoft’s leadership in the burgeoning AI industry.

The latest rounds of job cuts came in waves beginning in May and continuing into July, affecting thousands of employees. Despite the upheaval, Microsoft’s robust market performance and strategic growth fuel optimism about its future in the AI-powered economy.