Microsoft Offers Voluntary Buyouts to 60,000 Employees as AI Spending Soars

Quick Facts

• Microsoft is offering voluntary buyouts to about 60,000 employees, or roughly 27% of its 223,000-person global workforce.
• Eligible workers in the U.S., Canada, India and the U.K. have until early December to decide; those who accept exit Dec. 31.
• Microsoft's capital expenditures hit $175 billion on an adjusted basis in fiscal 2026, with $190 billion projected for calendar year 2026.

Microsoft said Monday it is offering voluntary buyouts to about 60,000 employees as the company works to contain costs and fund its AI buildout, first reported by Business Insider and confirmed widely across the industry.

The program covers workers at experience level 70 or below in the U.S., Canada, India and the United Kingdom. Divisions including Xbox, Windows, Copilot and Finance are participating. Employees in data centers, sales and marketing are excluded.

Workers who accept will receive benefits comparable to a standard severance package. The deadline to decide is early December, with departures effective Dec. 31.

A Smaller Offer Than the Spring Program

The buyout follows a voluntary retirement program Microsoft ran earlier in 2026, which offered more generous terms and drew acceptance from roughly 30% of those eligible. Microsoft told GeekWire it expects a much smaller share to take this newer offer. Industry data suggests 3% to 5% of tech employees offered buyouts typically accept.

Microsoft CFO Amy Hood said in April the spring retirement program carried a $900 million charge, and the company may book a similar projected cost when it reports fiscal first-quarter results on Oct. 28. Analysts expect $4.71 in adjusted earnings on $90.62 billion in revenue for that quarter.

AI Spending Drives the Shift

Microsoft's capital expenditures and finance leases reached $175 billion on an adjusted basis in fiscal 2026, which ended June 30. Full-year property and equipment spending totaled roughly $116 billion, up nearly 80% from fiscal 2025. Hood told investors the company expects to spend approximately $190 billion in capital expenditures for calendar year 2026, including about $25 billion tied to higher component pricing.

CEO Satya Nadella noted in Microsoft's FY2026 annual earnings report that Azure revenue surpassed $100 billion for the first time and Microsoft 365 Copilot reached over 30 million paid seats. Revenue for the full fiscal year hit $331.8 billion, up 18%. Net income rose 31% to $133.7 billion.

Company Says Headcount Cuts Are Not AI Replacements

Amy Coleman, Microsoft's EVP and Chief People Officer, sent a memo to employees describing the program as a way to give workers a supported path out while helping the company adapt. "This offer gives eligible employees who may be considering a future outside the company a new choice to make that transition now with support," she wrote.

A company spokesperson said the offer is not a sign Microsoft needs fewer people overall. Coleman also addressed the company's earlier July 2026 layoffs directly: "I want to be direct that the roles eliminated today are not being replaced by AI."

Investor Reaction

Microsoft shares closed at $532.60 on Oct. 26, up 1.54% on the day. Wells Fargo maintained an Overweight rating and a $725 price target, noting that a one-third acceptance rate could produce a meaningful operating margin benefit. Oppenheimer raised its price target on the stock from $570 to $625 and kept an Outperform rating.

Microsoft's headcount fell to 223,000 as of June 30, 2026, down from 228,000 the prior year. That marked the company's first annual decline in employee headcount in a decade. The workforce breakdown includes 89,000 in operations, 77,000 in product R&D, 43,000 in sales and marketing and 14,000 in general and administration.