Microsoft tops $4T in valuation — great news for the company, not so great for its workers

If you own Microsoft stock, you’ve got to be happy.

Microsoft’s latest financial results for the quarter ending June 30, 2025 were robust: Revenue reached $76.4 billion (up 18% year-over-year), with net income at $27.2 billion (up 24%). The primary driver was robust growth in Microsoft’s cloud and AI businesses. Azure’s revenue, which has finally been separated out in the financial reporting, now stands at $75 billion in annual revenue, representing a 34% surge for the year. 

Put it all together, and you can see why Microsoft has joined Nvidia in the $4-trillion valuation club. 

So much for the good news. Despite those impressive financials, Microsoft has laid off a substantial number of employees this year — about 25,000, to be exact, including roughly 9,100 in July alone (approximately 4% of its workforce). The layoffs have affected a broad range of divisions, including Xbox, engineering, and management layers.

What’s driving these cuts is clearly not poor performance. Instead, Microsoft is betting that its aggressive $80 billion AI investments will pay off. Don’t take my word for it:  Microsoft CEO Satya Nadella recently noted the “incongruence” of laying off employees even as Microsoft is “thriving.” He called this dynamic “the enigma of success” in a tech industry where progress demands constant change, even when things are going well.

“I want to express my sincere gratitude to those who have left,” he added. “Their contributions have shaped who we are as a company, helping build the foundation we stand on today. And for that, I am deeply grateful.”

I’m sure deep gratitude will help keep a roof over their heads.

Microsoft is far from alone in dumping once-valued employees for cheaper AI alternatives. IBM has cut 8,000 jobs so far this year. In particular, IBM is gradually replacing clerical jobs with AI, while its AskHR bot has taken over much of HR’s old workloads. At the same time, Meta is reducing its staff by 5% in 2025 as it switches gears from its metaverse dud to AI. 

Amazon CEO Andy Jassy put an even finer point on where things are headed. “As we roll out more generative AI and agents, it should change the way our work is done.” That means, he said, “We will need fewer people doing some of the jobs that are being done today.”

This isn’t just happening in the US. In India, Tata Consultancy Services (TCS) has cut 12,000 jobs this year. Why? Because its customers are moving to AI, which has sharply cut the outsourcing work the company has historically profited from. Meanwhile, in Japan, Indeed and Glassdoor’s parent company has laid off 1,300 workers, approximately 6% of its workforce, according to CEO Hisayuki “Deko” Idekoba.

“AI is changing the world,” he said. It certainly changed the world of the 130,000 or so tech jobs that have been lost this year, according to estimates by The Bridge Chronicle.

Oh, and by the way, Indeed reports that tech job postings in July were down 36% from their early 2020 levels. 

Is this a great time to be looking for a tech job or what!? But for every fantasy job, like the $100-million AI jobs Meta is supposedly offering, there are hundreds of tech workers who have kissed their six-figure positions goodbye and thousands of clerical staffers who will no longer be making five-figure annual incomes.  

There’s one little problem with all these job cuts. We still don’t know whether AI can deliver the work goods. Sure, some jobs, such as repetitive HR or call-center work, can be largely replaced.  Heck, we’ve seen that happen before. I remember when many call-center jobs were located in the US — before companies figured out that outsourcing such jobs to low-cost countries was cheaper. For jobs like these, AI is just the next step in cost-cutting. 

Companies often use AI like that — to cut costs. Not many are using it to help good workers become great workers. Instead, CEOs are buying the illusion that AI can magically replace highly skilled workers.

I hate to break it to you: It can’t. Take programming. According to the 2025 Stack Overflow Developer Survey, 84% of programmers now use or plan to use AI tools in their workflow. However — and this is a crucial point — 46% of AI-using developers don’t trust AI results. In fact, even as AI developer tools have supposedly improved, programmers are trusting them even less. 

Why? Because they’re spending a lot of their time fixing AI mistakes. AI programming tools make fine interns, but they’re not senior or even mid-level developers. 

Let’s also remember that in the last few weeks, Replit, the leading vibe-coding company, which promises to make “software creation accessible to everyone, entirely through natural language,” wrecked a production database for a senior tech executive who was trying, and spectacularly failing, to build a new application.

The bottom line is that AI is not good enough, not yet anyway, to replace engineers and developers. This will come back and bite companies like Microsoft in the rump. Sure, the market loves companies that cut costs. But if AI doesn’t deliver on its promises, getting all those experienced ex-workers back in the foldwon’t be easy.

Today, AI is great for getting people to believe that groups of bunnies love hopping on trampolines; but doing hard technical work? That’s another question entirely. Microsoft tops $4T in valuation — great news for the company, not so great for its workers – ComputerworldRead More