Microsoft Cuts 4,800 Jobs as Analyst Says Xbox Has Become 'Almost Irrelevant' to AI Push

According to DA Davidson analyst Gil Luria in a CNBC interview on Monday, Microsoft's Xbox business has become "almost irrelevant" as the company redirects all investment toward AI and data center expansion. Luria stated that Microsoft realized bigger markups from AI infrastructure than from gaming. "Every investment dollar now is going to AI, to building data centers," he said.

Microsoft announced layoffs affecting 4,800 employees, or 2.1% of its global workforce, with Xbox division accounting for 3,200 cuts, or roughly 10% of the unit's headcount. Xbox CEO Asha Sharma said the business is "not healthy" and operating at margins 3-10x lower than comparable platform businesses. The company is scheduled to report Q4 earnings on July 29, with Wall Street expecting $87.66 billion in revenue.