Science & Technology · 6 Intermediate · October 29, 2026

Microsoft Profits Grow Despite Major Layoffs

Photo: Jelson25 (Public domain) via Wikimedia Commons

Listen

Vocabulary

workforce /ˈwɜrkfɔrs/ noun

all the employees in a company or industry

The company reduced its workforce by offering voluntary buyouts to eligible employees.

profitability /ˌprɒfɪtəˈbɪləti/ noun

the quality or state of producing profit or financial gain

Investors questioned the long-term profitability of such heavy spending on artificial intelligence.

infrastructure /ˈɪnfrəstrʌktʃər/ noun

the basic physical systems and facilities needed for operation

Building AI infrastructure requires massive investments in data centers and powerful computers.

volatility /vɒˈlætɪləti/ noun

tendency to change rapidly and unpredictably

The sector's current volatility makes it difficult for investors to predict which companies will succeed.

sustainable /səˈsteɪnəbl/ adjective

able to continue over time without depleting resources or causing collapse

Technology companies must prove that their AI spending is sustainable and will eventually improve profits.

channeling /ˈtʃænəlɪŋ/ verb

directing or guiding something toward a particular goal or destination

Microsoft is channeling billions of dollars into artificial intelligence development and infrastructure.

Article

Microsoft announced record profits of $36.6 billion for the three-month period ending in September, yet the company revealed plans to reduce its workforce by more than a quarter through voluntary buyouts affecting around 60,000 employees. This decision reflects a common pattern among major technology firms struggling to balance profitability with the enormous costs of developing artificial intelligence systems. The company's share price rose 2.9% following the earnings announcement, suggesting investors remain confident in Microsoft's strategy.

Cloud Computing and AI Investment

Microsoft's strong financial performance was primarily driven by its cloud computing division, which saw revenue increase by 30% compared to the previous year. The firm is channeling billions of dollars into AI infrastructure, including data centers and specialized computer chips, alongside competitors like Amazon, Meta, and Alphabet. These technology giants collectively plan to spend more than $700 billion this year on AI-related equipment and systems, yet uncertainty persists about whether such massive expenditure will ultimately generate sufficient returns.

Mixed Results Across the Tech Sector

While Microsoft's results exceeded expectations, the contrasting performance of Google's parent company, Alphabet, illustrates the sector's current volatility. Alphabet disappointed investors by reporting a 25% decline in quarterly profits and announced plans to continue substantial AI spending despite weaker financial results. These divergent outcomes underscore investor concerns about whether heavy investment in artificial intelligence constitutes a sustainable business strategy for technology companies.

Discussion Questions

Why do you think Microsoft continued hiring costs by offering buyouts at the same time profits reached record levels?
What does the article suggest about whether large AI investments have proven their value to investors?
How might the different results for Microsoft and Alphabet affect investor confidence in the technology sector?
According to the article, what is driving Microsoft's cloud computing revenue growth?
Do you think a company should reduce its workforce during a period of strong financial performance? Why or why not?

Open the full interactive lesson with tap-to-hear on every word →

Ready to speak English with real confidence?

Work 1-on-1 with Digby R. Kerr.

Claim Your Free 30-Min Class