Microsoft Stock (MSFT) Climbs Despite Layoffs and Major Game Cancellations

Microsoft’s sweeping layoffs eliminate 9,000 jobs and multiple Xbox games, but investor confidence drives MSFT stock higher.

Microsoft has embarked on a major restructuring, announcing about 9,000 job cuts that will affect less than 4 percent of its global workforce. The move is already reshaping the company’s gaming division, with several high-profile Xbox games being shelved. Yet despite the upheaval, investors appear unfazed. Microsoft stock climbed after the news, reflecting confidence in the company’s profitability and strategic direction.

Massive Job Cuts Aim to Streamline Management

The latest round of layoffs marks another step in Microsoft’s ongoing effort to adapt to a rapidly changing tech landscape. This reorganization, announced at the beginning of its 2026 fiscal year, follows multiple rounds of job cuts earlier this year, including 6,000 in May and at least 300 in June.

A Microsoft spokesperson said, “We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace.”

The company, which employed 228,000 people as of June 2024, is reducing management layers to increase agility. This approach mirrors similar moves made during earlier layoffs and aims to improve communication between top executives and individual contributors.

Gaming Division Hit Hard with Game Cancellations and Studio Cuts

The cuts have significantly impacted Microsoft’s gaming segment, particularly Xbox Game Studios. Several game development projects have been abruptly halted, including:

• A new Perfect Dark title
• Rare’s Everwild
• An MMO under development at ZeniMax Online Studios
• Additional unnamed titles, including a project from Romero Games

Phil Spencer, CEO of Microsoft Gaming, explained in a memo, “To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business.”

Studios affected include:

• The Initiative, which is shutting down with the cancellation of Perfect Dark
• Rare, which is scaling back after cutting Everwild
• ZeniMax Online Studios, where Executive Matt Firor is reportedly stepping down
• Turn 10 Studios, developer of Forza Motorsport, which reportedly halved its staff
• Blizzard, which is ending support for Warcraft Rumble and reassigning or laying off employees
• Other affected developers include Halo Studios, Sledgehammer Games, High Moon, Raven Software, and King, the Candy Crush creator

Stock Surges Amid Strong Financials and Growth Projections

Despite the cuts and cancellations, Microsoft stock rose 1.33 percent Thursday, continuing an 18.52 percent year-to-date rally and a 5.03 percent gain over the past 12 months.

Wall Street analysts remain bullish on Microsoft’s prospects. The stock holds a Strong Buy rating based on 30 Buy and four Hold recommendations, with an average price target of $524.86, suggesting a potential 5.38 percent upside.

This confidence is buoyed by Microsoft’s strong financial performance. The company reported nearly $26 billion in net income on $70 billion in revenue for the March quarter. Executives expect around 14 percent year-over-year revenue growth in the June quarter, driven by Azure cloud services and productivity software.

CoinLaw’s Takeaway

Microsoft’s decision to slash 9,000 jobs and streamline its gaming division highlights the pressures even the most profitable tech giants face in staying agile. While the cancellation of major titles signals a pullback in game development, the company’s strong stock performance and analyst support indicate investor confidence in Microsoft’s broader strategy. This balancing act between trimming costs and pursuing innovation will be crucial to sustaining its market leadership.