Microsoft reported a record net profit of $27.2 billion in the fourth quarter of its fiscal year 2025

Microsoft’s net profit in the fourth quarter of fiscal year 2025 reached a record high of 27.2 billion US dollars, but the company’s decision to lay off 9,000 employees during the same period has sparked controversy. The company’s recent financial report for the fourth quarter of fiscal year 2025 shows that its revenue reached 76.4 billion US dollars, an increase of 18% year-on-year, and its net profit was 27.2 billion US dollars, an increase of 24% year-on-year, setting a new record. However, this impressive performance contrasts sharply with the company’s recent decision to lay off 9,000 employees, leading to discussions about the trend of “profit-driven layoffs” in the tech industry.

AI and cloud services drive growth, but cost-cutting measures raise questions
Microsoft CEO Satya Nadella emphasized in the earnings call that Azure cloud services and artificial intelligence (AI) business are the core engines of the company’s growth. Azure’s revenue increased by 39% year-on-year, with annual revenue exceeding 75 billion US dollars, and the monthly active users of AI tools such as Copilot have exceeded 100 million. However, Nadella also admitted that the application of AI technology has significantly improved operational efficiency, leading to the elimination of some traditional positions. For example, Microsoft’s internal AI customer service system saves over 500 million US dollars in labor costs annually.

Layoffs and hiring go hand in hand, H-1B visa controversy intensifies
Despite laying off 17,000 employees in 2025 (7% of the total workforce), Microsoft’s global employee count remained at around 228,000, the same as last year. Notably, during the layoff period, the company still submitted thousands of H-1B visa applications, drawing criticism from the US political circle. Vice President J.D. Vance publicly accused the company of “laying off American employees while relying on foreign workers.” Microsoft responded that 78% of the H-1B applications were for renewals of existing employees, with only a few involving new hires.

Nadella’s internal memo: Outdated skills are the main reason for layoffs
In an internal memo on July 28, Nadella admitted that the layoff decision was “difficult but necessary” and hinted that some employees were eliminated because their “skills were not adapted to the AI era.” He called on the remaining employees to “continuously learn new knowledge” to match the company’s AI-first strategy. Analysts point out that Microsoft’s layoff logic reflects a common trend in the tech industry – high profits and high layoffs coexist, and AI technology is reshaping the employment structure.

Market reaction: Share price surges 8%, capital expenditure continues to soar
After the release of the financial report, Microsoft’s share price rose by 8% in after-hours trading, with a market value exceeding 4.1 trillion US dollars, ranking second globally. The company also announced that it will invest over 30 billion US dollars in the first quarter of fiscal year 2026 for the expansion of AI and cloud infrastructure, although the growth rate of capital expenditure may slow down.

Looking ahead, Microsoft expects to maintain double-digit growth in fiscal year 2026, but the industry disruption caused by AI may continue to affect the job market.

About Microsoft
Microsoft (NASDAQ: MSFT) is a global leader in cloud computing, artificial intelligence, and productivity platforms, dedicated to empowering businesses and individuals worldwide.