Microsoft Offers Voluntary Retirements Instead of Layoffs

Microsoft (Nasdaq: MSFT) announced its third quarter results that outpaced market expectations. But its outlook for the current quarter was not that impressive.

Microsoft’s Financials

Microsoft’s third quarter revenues grew 18% to $82.9 billion, beating analyst estimates of $81.4 billion. EPS of $4.27 also exceeded analyst estimates of $4.06 per share.

Revenue from its Intelligent Cloud unit, which includes Azure, came in at $34.7 billion, ahead of the market’s estimate of $34.3 billion. Microsoft continues to see strong Azure growth with Azure reporting a 40% growth compared with 39% expected by the market. Microsoft’s Productivity and Business Processes segment grew 17% to $35 billion compared with the estimate of $34.4 billion. The More Personal Computing unit saw revenues fall 1% to $13.2 billion, ahead of the analyst expectations of $12.7 billion.

Microsoft expects revenues of $86.7-$87.8 billion for the quarter compared with market estimates of $87.5 billion. It expects Azure to grow 39-40% over the year, ahead of the market’s forecast of 37% growth. It expects operating margins of 44%-46.3%, compared with the market’s expected 44.6%.

Microsoft’s stock is currently trading at $414.48 with a market capitalization of $3 trillion. It hit a 52-week high of $555.45 in October. It was trading at a 52-week low of $356.28 in March.

Microsoft’s OpenAI Deal

The big news for Microsoft has been the latest restructuring of its partnership with OpenAI. Under the new deal, Microsoft will remain OpenAI’s primary cloud partner, with OpenAI products being shipped first on Azure. But OpenAI will now be able to offer all its products to customers across any cloud provider. OpenAI has already signed up with Amazon to make its models available on AWS. Microsoft will continue to have a license to OpenAI IP for models and products through 2032, but it no longer be the exclusive license holder. An earlier amendment to the contract had given Microsoft exclusive access to OpenAI’s IP and models until OpenAI achieved artificial general intelligence (AGI). The latest amendment has removed that clause from the contract.

Microsoft will also no longer be required to pay a revenue share to OpenAI. Revenue share payments from OpenAI to Microsoft will continue through 2030, independent of OpenAI’s own progress. Revenue from OpenAI to Microsoft will now be capped at $38 billion through this period. The changes to the partnership will allow OpenAI to partner with the likes of Amazon and Google to expand its footprint. The payment cap would also help OpenAI in getting IPO ready. The new deal gives both parties more freedom to choose their other delivery and vendor partners.

Both Microsoft and OpenAI have been slowly diversifying their investments into other AI and cloud services vendors. OpenAI has been partnering with Amazon besides Microsoft for compute capacity. Microsoft has also been investing in Anthropic besides OpenAI for AI capabilities.

Layoffs at Microsoft

To keep with the times, Microsoft also increased its capex plans for the rest of the year. It now forecasts spending $190 billion in capex for 2026, increasing from $150 billion that it had forecast earlier. About $25 billion of this increased capex spend is attributed to higher component prices. Some of these investments are being funded through headcount reorganization that it had announced last year. Last month, for the first time ever, it also offered voluntary retirement buyouts to nearly 7% of its U.S. employees.

As of April 2026, the global tech industry has recorded 78,557 layoffs, with 76.7% occurring in U.S. companies. While giants like Oracle (25,000+), Amazon (16,000), and Block (4,000) lead the charge, a disturbing pattern has emerged.

According to research by Alan Cohen (RationalFX), nearly half of these job losses are now explicitly tied to “AI Restructuring.” However, a deeper analysis suggests that AI is often being used as an “AI-as-an-excuse” narrative to justify aggressive cost-cutting and boost sagging stock prices. Companies like Oracle have automated the termination process itself, firing thousands via 6:00 AM emails—a cold-blooded approach that reflects a total deficit of empathy and human kindness.

The 1Mby1M Perspective: Stop Being the Victim

There is only one permanent solution to this trend of mass layoffs and “AI-driven” displacement: Learn to become an entrepreneur. You don’t have to build a “Unicorn.” You just need to solve a real problem, build a sustainable business, and create your own livelihood. This tsunami of layoffs will continue; paralysis is not a solution. * If you have been laid off: Now is the time to pivot your skills toward a venture you own.

If you still have a job: Now is the perfect time to consider bootstrapping a startup with a paycheck before the next 6:00 AM email arrives.

Take Action Now

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About 1Mby1M:

One Million by One Million (1Mby1M) is the first global virtual accelerator in the world, founded in 2010 by Silicon Valley serial Entrepreneur Sramana Mitra. It offers a fully online entrepreneurship incubation, acceleration and education resource for solo entrepreneurs and bootstrapped founders working on tech and tech-enabled services ventures.

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