Microsoft denies reports of 20% cloud cuts to offset AI spending

Microsoft is pushing back on reports that the tech giant is considering major cuts to its cloud division amid increased spending on artificial intelligence. Citing sources familiar with the situation, The Information reported yesterday that Microsoft Azure Core president Girish Bablani has directed leaders in the division to develop plans to cut costs by at least 20%. Such cuts may be necessary to offset massive spending on AI data centers and free up funds for bidding wars over top talent. While the exact nature of the cuts is not clear, one option may be to let go of external contractors. A Microsoft spokesperson refuted the report, however, calling it “inaccurate and careless” and denying that Azure leadership has ordered managers to identify potential cuts. “Azure leadership has not directed teams to develop cost-cutting plans,” a Microsoft spokesperson said in a statement provided to Fast Company. “Every responsible company prepares for a range of scenarios and market dynamics, both positive and negative.” The rapid rise in AI use has put immense pressure on tech companies to invest heavily in data center infrastructure. During its 2026 fiscal year, Microsoft reported $145.3 …

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