Microsoft lays off thousands, makes $27 billion profit in Q2 — CEO Satya Nadella doubles down on AI mania

Microsoft layoffs in 2025 and Satya Nadella's AI strategy: At a time when thousands of Microsoft employees are still reeling from sudden job cuts, the tech giant has posted $27.2 billion in net income for the latest quarter, a 24% jump from the previous year, as per a report. The driving force behind that growth is AI and cloud technology, according to a GamesRadar report.

Microsoft Posts $27.2 Billion Profit Amid Massive Layoffs

While the financial figures made headlines, the human cost behind them hasn’t gone unnoticed. Just weeks before this earnings report, Microsoft laid off around 9,000 employees across multiple divisions, as per the GamesRadar report. The decision sparked widespread frustration among workers, especially as the company continues to invest billions into artificial intelligence and massive data infrastructure projects, according to the GamesRadar report.

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CEO Satya Nadella Doubles Down on AI-First Strategy

In a statement released with the earnings, Microsoft CEO Satya Nadella leaned into the company’s AI-first strategy, as per the report. Nadella pointed out that, "Cloud and AI is the driving force of business transformation across every industry and sector," as quoted by GamesRadar. He highlighted that, "We’re innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads," as quoted in the GamesRadar report.

Even previously, Nadella has highlighted superlative comments about AI, which accompanied an acknowledgement of the company's layoffs amid "thriving" financial wins as, simply, "the enigma of success," as reported by GamesRadar.

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Microsoft’s Tough Choice: Layoffs or Cutting AI Spending

According to reports that surfaced in the wake of Microsoft’s decision to lay off 9,000 employees, the company was faced with a stark choice: scale back its aggressive spending on AI or let thousands of workers go, as reported by GamesRadar. It clearly chose the latter option, and for many, it felt like watching a small city's worth of people lose their livelihoods so a tech behemoth could double down on its next big bet, according to the report. However, "in the amoral world of publicly traded companies, it sadly appears that it's paying off for now, wrote GamesRadar.

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Broader Growth Across Microsoft’s Product Lines

Meanwhile, Microsoft saw a 10% boost in gaming revenue in this quarter, along with content and services revenue up 13%, which was largely "driven by growth in first-party content and Xbox Game Pass," that helped balance out a 22% drop in Xbox hardware sales, as per the report. Even gaming, along with Windows, Microsoft 365, and LinkedIn, all showed growth in the latest quarter, however, the rise was not just not as much as cloud and AI, as reported by GamesRadar.

FAQs

Why did Microsoft lay off 9,000 employees recently?
Microsoft decided to cut jobs mainly to prioritize investments in AI and cloud computing, which are driving its future growth, as per the GamesRadar report.

What is driving Microsoft’s financial growth?
The main drivers are AI and cloud technology, especially revenue from Azure.