Microsoft (MSFT) Layoffs Expand a Major AI Trend

Microsoft (MSFT) will reportedly cut thousands of jobs soon as it looks to reduce its sales team. This comes as the company embraces artificial intelligence (AI), which allows it to offload some responsibilities of workers to AI. The tech giant has also made huge advancements in AI, pledging $80 billion to the sector this year.

With its huge investments in AI, Microsoft needs to show investors that its spending is worth something. While it’s already using its data centers to increase growing AI demand, utilizing the technology to enhance the efficiency of its operations is another way to show the product of its investment.

The latest Microsoft job cuts aren’t the only ones it has announced recently. Just last month it laid off 6,000 workers, 3% of its workforce, to streamline organizational layers and boost efficiency.

The AI Revolution Strikes the Workforce

It’s not just Microsoft that is laying off workers with the help of AI. Amazon (AMZN) CEO Andy Jassy said the company will experience a “total corporate workforce” reduction due to “efficiency gains from using AI extensively.”

Other recent and upcoming Silicon Valley layoffs include:

• Meta Platforms (META) laid off 3,600 employees in February.
• Alphabet’s (GOOGL) Google cut hundreds of jobs that same month, with rumors of 24,000 cuts being made in 2025.
• Intel (INTC) reportedly plans to reduce its workforce by more than 10,000 employees this year, following 17,500 cuts in 2024.

What Jobs Will AI Come for Next?

Silicon Valley inhabitants aren’t the only ones threatened by AI-fueled layoffs. A report from McKinsey Global Institute highlights other industries and roles that will be affected by AI over the next five years. It expects support roles to drop 18% by 2030 compared to 2022, sales positions to decrease 13%, a 2% reduction in food service roles, and a 1% decrease in manufacturing jobs.

Do AI Layoffs Affect Analyst Ratings?

If they do, it’s in favor of the companies making them. AI layoffs can reduce payroll spending while cutting layers of management, making companies quicker to react to market and economic trends while saving money.

Of the companies mentioned above, all but Intel have consensus Strong Buy ratings. Alphabet’s upside potential is the highest at 14.88%, with Amazon right on its heels at 13.7%. INTC lacks behind its tech peers with a consensus Hold rating and possible 0.88% downside.

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