Meta Platforms and Microsoft moved to shrink their workforces on Thursday, with Meta telling staff it will cut roughly 8,000 jobs starting May 20 and Microsoft offering voluntary buyouts to about 7% of its US employees, as both companies seek to offset record AI infrastructure spending.
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The parallel announcements mark one of the clearest signals yet that the capital demands of the AI buildout are now colliding with operating budgets at the largest hyperscalers. Meta shares traded at roughly $672.74 on Thursday, while Microsoft fell around 1.5% to trade near $415.46 as investors digested the workforce news alongside Microsoft's separate A$25 billion ($18 billion) Australia AI commitment announced the same day.
Meta layoffs to take effect May 20 amid record capex
Meta will cut approximately 8,000 jobs — about 10% of its global workforce — starting May 20, according to an internal memo first reported by Bloomberg and confirmed by TechCrunch. The company will also leave 6,000 open roles unfilled. Meta employed roughly 79,000 people at the start of 2026, so the combined actions effectively shrink planned headcount by closer to 18%.
Chief People Officer Janelle Gale tied the cuts directly to the company's spending trajectory in the memo, writing that the move would "allow us to offset the other investments we're making." She added: "I know this is unwelcome news and confirming this puts everyone in an uneasy state, but we feel this is the best path forward, given the circumstances."
The scale of "the other investments" is substantial. Meta has guided to capital expenditures (spending on data centers, chips and infrastructure) of $115 billion to $135 billion in 2026 — up from $72.2 billion in 2025, an increase of roughly 73% at the midpoint. The company has also signed several multibillion-dollar AI partnerships in recent months, including a $14.3 billion deal for a 49% stake in Scale AI that brought CEO Alexandr Wang in to run Meta Superintelligence Labs as Chief AI Officer.
US-based laid-off employees will receive 16 weeks of base pay plus two weeks per year of service, along with 18 months of COBRA health coverage, according to the memo.
Microsoft voluntary buyouts target 7% of US workforce
Microsoft's program is different in structure but similar in intent. The company is offering voluntary retirement buyouts to roughly 7% of its US workforce — approximately 8,750 of its 125,000 US employees as of June 2025 — in what CNBC reports is the first such program in the software maker's 51-year history.
Eligibility is tied to a "rule of 70": an employee's age plus years of service must total 70 or more. The program applies to workers at the senior director level and below, and excludes employees on sales incentive plans. Eligible staff and their managers will be notified on May 7.
The buyout program was announced in an internal memo from EVP and Chief People Officer Amy Coleman, who wrote: "Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support."
The workforce move lands the same day Microsoft announced a A$25 billion (USD 18 billion) investment in Australia by 2029 — its largest-ever commitment in the country — to expand Azure AI supercomputing, cybersecurity and workforce skilling. CEO Satya Nadella announced the deal in Sydney alongside Prime Minister Anthony Albanese.
AI infrastructure spending is reshaping hyperscaler cost structures
The efficiency drive reflects a broader shift across the hyperscaler cohort (the handful of cloud providers — chiefly Microsoft, Google, Amazon and Meta — running the largest AI-capable data centers): headcount is increasingly the variable cost absorbing the fixed cost of GPUs, power and land. Jefferies analysts, in a note cited by CNBC last month, wrote that Meta's willingness to cut staff while ramping AI capex "signals a broader shift: AI is increasingly driving productivity," with implications for how investors value the link between headcount, growth and margins.
Block cut 40% of headcount earlier this year citing AI, and Amazon eliminated 16,000 roles in January as part of its own AI-linked restructuring. Both Meta and Microsoft report quarterly earnings on April 29, where capex guidance will be scrutinized against these workforce reductions.
