Microsoft cut 4,800 jobs, filed 2,879 H-1B visas — but the real reason behind its $1.2T market value drop is far bigger

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Microsoft cut 4,800 jobs, filed 2,879 H-1B visas — but the real reason behind its $1.2T market value drop is far bigger Godwin Oluponmile Sun, July 19, 2026 at 9:00 AM EDT 6 min read If you've got an S&P 500 index fund in your 401(k), about $4 out of every $100 in it is invested in Microsoft (1). You didn't pick it; it came with the fund. So its stock price activity affects your retirement savings whether you follow the company or not. On July 6, Microsoft cut 4,800 jobs — a little over 2% of its staff (2). Around the same time, Department of Labor data showed Microsoft had filed 2,879 H-1B visa labor condition applications this fiscal year (3). Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here's what it is and 3 simple steps to fix it ASAP Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going By then, the stock had already shed about $1.2 trillion in value since its peak last October (2). So should you worry? Well, not about the visa applications that had many up in arms (more on that later). Microsoft is pouring about $190 billion in capital spending this year — most of it on AI data centers. The stock drop is investors questioning that decision. About 1,600 job cuts were in Xbox, which is facing its own set of problems. Xbox CEO Asha Sharma told staff the division was running at margins "3–10x lower than comparable platform and publishing businesses." Microsoft is also spinning off four game studios to stand on their own (4). Most of the rest came out of commercial sales and consulting. Microsoft's Chief People Officer Amy Coleman told employees the eliminated roles aren't being directly replaced by AI, even though "AI is changing how work gets done (5)." Microsoft President and Vice Chair Brad Smith also told Geekwire that: "Microsoft can only be a strong employer if it has a successful business (2)." It all comes back to costs. Back in April, Microsoft Executive Vice President and CFO Amy Hood told analysts that expenses would grow about 7% for Q4, but margins should still rise in fiscal 2026, even after about $900 million in one-time retirement costs (6). Microsoft ran its first voluntary retirement program this spring and summer, and about 30% of roughly 8,750 eligible U.S. employees took it. (5) Those retirements were voluntary, which cut down how many people were laid off outright. On that same April call with analysts, Hood said Microsoft expects to spend about $190 billion on capital expenditures in 2026, with roughly $25 billion of that just covering higher prices on AI parts (6). The business footing that bill is not actually struggling. In the three months ended March 31, Microsoft made $82.9 billion in revenue, up 18% compared to last year, and $31.8 billion in profit, up 23%. Azure, its cloud business, grew 40%. The spending eventually affects cash. While Microsoft's operating cash flow was $46.7 billion last quarter, up 26%, (7) free cash flow — what's left after all that building — slipped to $15.8 billion from $20.3 billion a year earlier (8). This is the part investors keep coming back to. Microsoft is earning more and keeping less, and nobody knows when the AI spend will start to earn its keep. GeekWire put the market damage at (2)roughly $1.2 trillion (2) by the day of the layoffs, a 30% drop in nine months. That leaves the aforementioned 2,879 number. Before Microsoft can hire someone from abroad, it has to file paperwork with the U.S. Department of Labor promising to pay that person the going rate for the role in that city. That paperwork is a labor condition application, or LCA. It doesn't let anyone into the country. Companies file LCAs for people who've already been on their payroll for years. That's the part the outrage skipped. Microsoft's 2,879 H-1B filings this fiscal year are mostly renewals and internal transfers — paperwork for people who already work in the U.S., not a surge of new arrivals (9). Immigration experts told Newsweek the pattern is common across big tech. Companies file for large numbers of LCAs for high‑skilled roles, while they cut domestic headcount (9). The filings themselves show why — most renew existing workers rather than bring in new ones (10). Microsoft says the same. "These decisions are based on business need, not visa status," a spokesperson told Newsweek. "H-1B employees were also impacted by job eliminations in the U.S (9)." What's actually moving Microsoft's stock price is its lofty AI bill, and you don't need a spreadsheet to track it. Watch two numbers when the company next reports earnings on July 29: whether Azure is still growing near 40%, and if capital spending is finally leveling off instead of climbing (11). If growth holds up while spending plateaus, that's a sign the AI build‑out is starting to pay for itself. If the spending is still growing faster than revenue, that's a sign investors have a good reason to be worried. Here are the 7 top habits of 'quietly wealthy' Americans. How many do you follow? The tax breaks in Trump's 'big beautiful bill' expire after 2028 — and experts say most people won't act in time. What to do before the window closes When he dies, Warren Buffett said 90% of his wife's inheritance will go into a single investment. Here's why (and how you can do it too) Here's the average income of Americans by age in 2026. Are you keeping up or falling behind? We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines . SlickCharts ( 1 ); GeekWire ( 2 ); H1B Grader ( 3 ); Xbox News ( 4 ); Microsoft Blogs ( 5 ); Microsoft ( 6 ), ( 7 ); Finsee ( 8 ); Newsweek ( 9 ); U.S. Department of Labor ( 10 ); Microsoft News ( 11 ) This article originally appeared on Moneywise.com under the title: Microsoft cut 4,800 jobs, filed 2,879 H-1B visas — but the real reason behind its $1.2T market value drop is far bigger This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

AI 시장 분석

Microsoft recently announced 4,800 layoffs and a $190 billion investment in AI data centers, yet its market value has fallen $1.2 trillion from its peak. Despite revenue and operating profit growth of 18% and 23% respectively, free cash flow declined from $20.3 billion to $15.8 billion due to massive capital expenditures, causing investor concern. As the monetization timeline for AI investments remains unclear, the market is questioning the company's cost efficiency.

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DYAX 전담 분석

Microsoft's aggressive capital allocation towards AI infrastructure has created a divide between long-term growth prospects and immediate financial pressures.

While Azure's performance remains robust, the sheer scale of capital spending has significantly eroded free cash flow, tightening the company's financial flexibility. Investors are now shifting their focus from potential AI dominance to the tangible impact of these investments on bottom-line profitability.

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