Microsoft has opened a voluntary exit program for around 60,000 employees, close to a quarter of its workforce, while it plans to invest around $175 billion in 2026 in data centers and AI infrastructure. The company isn’t in any kind of crisis: it closed fiscal year 2026 with $331.839 billion in revenue, up 17.8%. But the cost of that infrastructure is already showing up in its gross margin and free cash flow, and headcount has become one of the levers for sustaining profitability.
Microsoft’s AI spending and workforce in 30 seconds
- Microsoft’s capital expenditure went from 12% to 34.9% of revenue between fiscal years 2022 and 2026.
- Depreciation now accounts for 11.6% of revenue, and gross margin fell to 67.9%.
- Operating margin rose to 46.8%, with a workforce that has been shrinking since 2025.
- The voluntary exit reaches around 60,000 employees, following July’s layoffs and an earlier retirement offer.
According to GeekWire, the offer went out on October 26 and reaches employees in the United States, Canada, the United Kingdom and India, including some vice presidents, with a package equivalent to the standard severance. Microsoft maintains that it doesn’t mean the company needs fewer people and that AI isn’t behind it. Noticias.ai has analyzed the offer’s terms and the company’s version in detail.
How much data centers weigh on the books
Microsoft’s transformation into a major infrastructure operator shows up in its financial statements. According to sec-api.io‘s analysis, the company spent $115.948 billion in cash on capital expenditure in fiscal 2026, almost five times the $23.886 billion of 2022. As a share of revenue, that investment rose from 12% to 34.9%. For calendar year 2026, Microsoft is guiding for roughly $175 billion, revised down in July partly due to an accounting change, and expects to top $50 billion in just the first quarter of fiscal 2027 alone, according to TIKR.
That effort has two visible effects. The first is depreciation: servers, GPUs and buildings are expensed over time, and their weight rose from 7.3% to 11.6% of revenue between 2022 and 2026, which contributed to gross margin falling from 69.8% in 2024 to 67.9%. Microsoft has also extended the useful life of its data centers and offices for accounting purposes from 15 to 25 years starting in fiscal 2027. The second is cash: free cash flow dropped 6.5% in 2026, to $66.987 billion, falling from 32.9% to 20.2% of revenue over four years. CFO Amy Hood has said it will remain positive in fiscal 2027.
Headcount as a margin lever
Despite that pressure, Microsoft’s operating margin reached 46.8% in 2026, about five points above the 41.6% of 2021. Revenue has nearly doubled over that period, from $168.088 billion to $331.839 billion, while headcount barely grew from about 181,000 to 223,000 people. With those public figures, revenue per employee rose from around $929,000 to about $1.49 million. And headcount is already shrinking: it dropped by 5,000 people in the last fiscal year, Hood said in April it would keep falling, there were around 4,800 layoffs in July, and in spring around 30% of the 8,750 employees offered early retirement accepted it, according to HR Dive and GeekWire.
The pattern repeats across the sector. Microsoft, Alphabet, Amazon and Meta plan to invest between $725 billion and $735 billion in infrastructure this year, according to estimates compiled by Value Add VC, and Meta laid off around 8,000 employees in April while raising its planned investment to at least $115 billion. For cloud customers, the consequence is twofold: more AI capacity available in the coming years, and providers that need to make that investment pay off, which can end up showing up in pricing and commercial terms.
Frequently asked questions
How much is Microsoft investing in infrastructure?
$115.948 billion in cash in fiscal 2026, and a guidance of around $175 billion for calendar year 2026.
Why is Microsoft’s gross margin falling?
Because of the weight of server and data center depreciation, which rose from 7.3% to 11.6% of revenue between 2022 and 2026.
How many employees can take the voluntary exit?
Around 60,000, close to a quarter of the workforce, in the United States, Canada, the United Kingdom and India.
Sources:
- Noticias.ai: Microsoft offers exit to 60,000 employees while ramping up AI spending
- GeekWire: Microsoft makes new voluntary exit offer
- sec-api.io: Financial analysis of Microsoft FY2026
- TIKR: Did Microsoft really cut its capex?
- HR Dive: Microsoft CFO flags workforce cuts as AI spending surges
- Microsoft: 2026 Annual Report
- Value Add VC: Big Tech AI Spending 2026
