Microsoft recently confirmed that the company will implement a small round of layoffs based on the performance of employees in various departments. In an email to CNBC, a Microsoft spokesperson said, "Microsoft has always valued high performers and we are always committed to helping our employees learn and grow. But when their business is not doing well, we will have to take the necessary steps."

Microsoft implemented a small number of layoffs, less than 1%

Business Insider first reported Microsoft's layoffs. According to an insider who requested anonymity, the layoffs represent less than 1 percent of the workforce. The scale of Microsoft's job cuts is relatively small compared to previous layoffs.

By the end of June 2024, Microsoft's total number of employees had reached 228,000. Despite the company's net profit margin of nearly 38 percent, the highest since the early 2000s, its shares have underperformed in the last year, rising just 12 percent, well below the Nasdaq's 29 percent gain.

In early 2023, Microsoft undertook a massive downsizing, laying off 10,000 employees and consolidating leases accordingly. And in January 2024, three months after Microsoft completed its $75.4 billion acquisition of Activision Blizzard, its gaming division laid off another 1,900 employees to avoid duplication.

The relationship between Microsoft and OpenAI is delicate, and AI cooperation faces challenges

As 2025 approaches, Microsoft's relationship with AI startup OpenAI becomes more nuanced. To date, Microsoft has invested more than $13 billion in OpenAI. The partnership helped Microsoft surpass $3 trillion in market value last year.

However, by the summer of 2024, Microsoft listed OpenAI as one of its competitors. Microsoft CEO Satya Nadella, in a recent podcast with investors Brad Gerstner and Bill Gurley discussing the relationship with OpenAI, used the phrase "there is tension in the partnership" to describe the current situation.

At the same time, the Microsoft 365 Copilot assistant with OpenAI technology is not yet widely available in the commercial world. Analysts at UBS noted in a report published in December 2024 that after attending Microsoft's Ignite conference, it felt like the Copilot rollout was "a little slow and below expectations."

Still, Microsoft has a positive outlook on its growth potential. The company's CFO Amy Hood predicted in October that revenue growth for Microsoft's Azure cloud platform would accelerate in the first half of 2025 due to increased AI infrastructure capacity.