Microsoft hits record high as layoff plans emerge to offset AI investment costs.

Microsoft Stock Reaches New High, Potential Layoffs to Balance AI Investment

As generative AI becomes a new battleground for tech giants, Microsoft faces the challenge of balancing large-scale investment with maintaining profitability. According to recent reports, Microsoft is expected to announce a large-scale layoff plan early next month, potentially affecting thousands of positions.

Stock Hits Historical High, Layoff Rumors Boost Rise

Despite a volatile market on Wednesday, Microsoft's stock rose 0.5% to close at $480.24, setting a new record closing high. The rise was partially fueled by layoff news, with the market generally viewing it as Microsoft's move to maintain profitability in response to high AI investments.

Microsoft's stock has risen 14% since the beginning of the year, standing out among the "Big Seven" tech stocks and further solidifying its leading position in the U.S. market.

Thousands of Positions May Be Cut, Sales at the Forefront

According to insiders, the focus of this layoff may be on non-core technology positions like sales and marketing, with total layoffs potentially reaching 6,000 people, about 3% of Microsoft's global workforce of 228,000. If true, this would be Microsoft's largest personnel adjustment since cutting 10,000 jobs in 2023.

Internal rumors of such layoffs had already circulated a month ago, and this news further corroborates these expectations.

High Investments Squeeze Profits, Tech Giants Streamline

Microsoft is not alone. In the heated AI race, tech giants like Alphabet, Google's parent company, and Amazon have also initiated "cost-cutting" plans. Last week, Google introduced voluntary departure plans across multiple departments, including engineering, marketing, and information teams.

According to Microsoft's April financial report, the company plans to invest up to $80 billion in AI infrastructure by the 2025 fiscal year. Analysts point out that such extensive investments will inevitably pressure the company's profit margins.

D.A. Davidson analyst Gil Luria even stated that if the current investment intensity continues, Microsoft might need to cut over 10,000 jobs annually in the future to maintain financial stability.

Market Logic Behind Layoffs

The layoffs taken by tech giants while advancing AI strategies reflect a common structural issue in the industry — AI strategies, while promising, require significant capital investment, yet traditional income streams and profit margins face bottlenecks.

Thus, reducing redundant positions and adjusting cost structures have become necessary choices for most tech companies. For Microsoft, this is not only an investment battle for future technology dominance but also a balancing act for cash flow and shareholder return rates.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.