Microsoft will cut 10,000 jobs in the latest round of staff redundancies to hit the tech industry.
It will affect up to 5% of its global workforce and cost the business $1.2bn (£972m) in severance and reorganisation costs.
Microsoft chief executive Satya Nadella said that while customer spending had grown during Covid, more people were now choosing to “exercise caution”.
He said the firm would continue to hire in key areas.
Breaking the news in a memo to staff, Mr Nadella said many parts of the world were in recession or anticipating one, while “at the same time, the next major wave of computing is being born, with advances in AI”.
Microsoft is considering a multi-billion-dollar investment in artificial intelligence company OpenAI, the maker of ChatGPT (Generative Pre-trained Transformer), according to the Financial Times.