Microsoft reduced its forecast for capital expenditure, a rare move in an industry that mostly continues to splurge more on huge AI investments.
The software giant said capex for the 2026 calendar year will be $170 billion from a previous forecast of $175 billion.
Chief Financial Officer Amy Hood gave the forecast on the company's fiscal first-quarter earnings call on Wednesday.
She said Microsoft was expecting new capacity to arrive from third-parties, but some of these "GPU-as-a-Service contracts" have been delayed until the second half of the fiscal year.
This likely refers to other providers of AI cloud services that use Nvidia GPUs to run their offerings. Microsoft has partnered with some outside providers to meet rampant AI demand.
Hood's comments could refer to a recent spate of AI data center project delays, which have mostly been caused by a lack of electricity, along with local opposition.
The CFO said Microsoft expects capex to accelerate in the second half of its fiscal year, as the delayed capacity kicks in.
Wall Street has become increasingly concerned the huge investments cloud companies are making to expand AI infrastructure. Microsoft last quarter kept its forecast unchanged, notable as many cloud giants have been steadily increasing their AI spending forecasts.
Overall, Microsoft reported $92.3 billion in revenue, up 19%, for the fiscal first-quarter ending Sept. 30. Azure cloud revenue was up 48% to more than $33 billion, surpassing Wall Street expectations.
Microsoft share were up about about 3% in after-hours trading following the earnings call.
Earlier this week, Microsoft offered a buyout to more than a quarter of its workforce. A Microsoft spokesperson told Business Insider on Wednesday that the company expects 5% of eligible employees at most to accept the buyout.
"We expect very few people to select this offer because of the growth opportunities here at Microsoft," Hood wrote in an internal memo viewed by Business Insider. Microsoft's headcount slipped 2% during the fiscal first quarter, the company reported.
Microsoft is offering buyouts to about a quarter of its workforce.
In an internal memo, Microsoft's finance boss said the company expects "very few people" to accept.
Employees had been questioning the rationale behind the offer, the memo said.
Microsoft expects 3,000 or fewer employees to accept the buyout it offered this week to more than a quarter of its workforce, a spokesperson told Business Insider.
The point was reiterated on Wednesday by Chief Financial Officer Amy Hood, who wrote in an internal memo that employees have been questioning the rationale behind the buyout.
"I know there have been some questions on the rationale behind the voluntary exit offer that we announced this week," Hood wrote. "Our intent is to offer employees agency if they choose to leave the company on their own terms. We expect very few people to select this offer because of the growth opportunities here at Microsoft."
The memo statement was part of a quarterly earnings email Hood typically sends internally to employees every quarter when Microsoft discloses its financials.
These memos mostly repeat what the company reports publicly, but this time Hood went out of her way to address the buyout offer, which caused quite a stir across the tech industry this week.
Earlier this year, Microsoft offered a different retirement buyout. In that situation, about one-third of eligible employees took the offer, and that helped Microsoft cut fewer employees in subsequent layoffs.
This week's buyout is getting a lot less uptake, according to the company.
Read the CFO's full memo
Team,
This afternoon, we announced our first-quarter financial results. We exceeded Wall Street expectations, growing revenue 19% and operating income 21%.
With the start of FY27, we also made an important change to how we report our business. We announced that we changed our reporting structure for the first time in 12 years, moving from three segments to two: Agents and Infra, and Devices and Consumer. This change better reflects how we are running the business today — from how we build products and allocate resources to how we create value for customers across the connected layers of our platform. To give you a sense of the two segments, looking back to last fiscal year, Agents and Infra would have represented about 81% of our revenue while Devices and Consumer would have been 19%.
A few highlights from the quarter across our two new segments:
Agents and Infra grew revenue 23% this quarter
Microsoft Cloud revenue was $63.9 billion and accelerated to 30%. Azure revenue increased 48% reflecting accelerating Foundry demand.
Microsoft 365 commercial cloud revenue increased 18% in constant currency driven by growth in our premium seat offerings like Copilot and E7 as well as usage-based services across M365 Copilot and GitHub Copilot.
Microsoft 365 commercial seats increased 5% and the number of customers with more than 50,000 M365 Copilot seats increased 8x year-over-year.
Microsoft 365 consumer cloud revenue increased 17% with subscriber growth of 7%.
Industry solutions cloud revenue increased 10% with growth in Dynamics 365 and LinkedIn Talent Solutions.
Devices and Consumer declined 3% this quarter
Search and advertising revenue ex-TAC increased 12%, with growth across LinkedIn, Bing, and Edge.
Windows OEM and devices revenue decreased 22%, reflecting the prior-year benefit from Windows 10 end of support, inventory drawdowns by OEM partners, and weaker PC market demand. XBOX content and services revenue decreased 2%. Last week, we launched Call of Duty: Modern Warfare 4, as we continue to bring great games to more players across more devices.
Thank you for everything you did to deliver a strong start to the year. In particular, I want to thank our engineering and capacity delivery teams who are working to help us deliver more capacity faster and with high reliability. These teams are also using the capacity we have more efficiently to create room for us to better meet customer demand for the Azure platform, which continues to exceed our supply.
I know there have been some questions on the rationale behind the voluntary exit offer that we announced this week. Our intent is to offer employees agency if they choose to leave the company on their own terms. We expect very few people to select this offer because of the growth opportunities here at Microsoft. We'll continue to provide a broad set of options for employees to learn, gain new skills, and advance their careers here.
We have tremendous opportunity ahead of us. To meet the moment, we are focused on delivering great products and solutions that help our customers to achieve their many goals — security, innovation, growth — to name a few. Thank you for keeping positive, value-creating outcomes for our customers at the top of the list.
To hear more details about the quarter and our outlook for Q2, you can join live today at 2:30PM Pacific Time, listen on-demand, or read the transcript on the Investor Relations website. Finally, mark your calendars for Microsoft Ignite, on November 17-20, where we'll show how our innovation across AI, cloud, data, security, and Copilot is coming together to help customers transform their businesses.
Chris Williams, former Microsoft VP of HR, said waiting for a better offer may or may not backfire.
He shared what employees who are offered a buyout should consider and what they may not realize.
Microsoft is offering buyout packages to some 60,000 employees, or more than 25% of the workforce. That's a huge number in any terms, and it sent a signal and shock wave through the industry this week.
I'm the former VP of HR for Microsoft, and although I've been away from the company for some time and have no insider information, having been on the inside at Microsoft and in the industry for 50 years, here is what Microsoft employees should be considering — and what they may not realize about taking a buyout offer.
Your buyout offer may or may not be the best offer you get
During a buyout, position, tenure, level, and other factors are taken into account for each bespoke offer. The offer is likely to include compensation, benefit continuation, and possibly some acceleration or continuation of equity vesting.
That said, Microsoft might not offer more generous buyouts than severance packages, but companies usually offer better terms to people who take a voluntary separation than people who get laid off. That is not only to induce employees to go voluntarily, but also because the costs to the company are less if these workers voluntarily leave. There is less legal risk, time, and expense. It's also simply easier for the company to manage.
If you're offered a buyout, I usually find it could be the best offer you'll get. If it's not, you could be settling for the same offer as someone in a layoff and miss out on collecting unemployment.
A buyout can force some very hard career choices
If you get a buyout offer, looking at your budget should be your next step. Does the offer provide you with enough to retire? Enough to support an extended job search? The buyout can be a good forcing function for some very hard career choices.
Spend time looking at your cash flows, and pay particular attention to benefits. For many, healthcare costs are a substantial part of their budget. Weighing the buyout offer against continued coverage is often a tipping point in the decision.
Also consider any equity vesting dates you may have. Compare when you might vest with and without the offer, as those dates can mean a significant change in your investments. Whether you should take the buyout is highly dependent on both the offer and your situation. If you had retirement anywhere in sight, this offer might be just the trigger you need to move on. Perhaps the best offer you'll ever see.
However, if you need to continue working, there's a great deal more to consider.
Taking a buyout can give you a head start in a tough job market
The tech industry job market has been rough for the last year or so, and shows all the signs of getting worse. If the buyout doesn't afford you the ability to retire, you should plan on an extended period of job searching, maybe six months or more. It's tough out there. Be prepared.
One thing to consider if you need to continue working is that taking the buyout might give you a short head start in the job market. Assuming Microsoft and others follow this up with more layoffs like they did the last time, the technical job market will be flooded with quality people. Of course, you can search for a job while you have one, but taking the buyout gives you time for a full-time job search.
In any case, if a job search is in your future, don't delay. This market shows no sign of getting better.
Finally, if you're offered a buyout, don't ignore it. It's a sign. I'd read it as a clear signal from the company about your value, at least from their perspective. You can bet on the odds, but if follow-up layoffs happen, I'd bet that those who declined the buyout are somewhere on that list.
Buyout or not, some things to do
This buyout is the latest signal of a broad realignment of the job market, at least in the tech sector. Even if you aren't offered it or don't think you're at risk of later layoffs, you'd be wise to keep all your options open.
Get your résumé up to date. Spend time honing it, emphasizing the clearest set of skills you can. When a market is contracting, the safest bet is having a particular skill someone is looking for. When times are tight, the generalist is often the first person let go.
Work with and expand your network. Have coffee or a Zoom chat with everyone you know. Peers in other companies, even other industries, are invaluable when things get tough. Especially when the world is changing, and predicting the next hot spot is so hard, having as many warm connections across industries is a huge asset.
Don't go asking for jobs as much as keep those connections alive. You never know when someone's manager will say, "We need someone like that." And your friend can say, "I know just the person."
Whether you are offered a buyout, or whether you decide to take it or not, having a network of people to connect with is your single biggest career asset.
What to do if you get a buyout offer
Budget first, and outreach next.
Carefully decide your near- and long-term financial future, and make the decision from hard facts. Then connect with people you know across industries, far and wide. Those connections will be excellent sounding boards and could well provide the path to your next role, or the friends you need in retirement.
When contacted about this story, a Microsoft spokesperson pointed Business Insider to its statement on the official Microsoft Blog, which read in part, "Today, we're introducing a new Voluntary Exit Offer (VEO) to eligible employees within participating organizations." They added that "the VEO is similar to a standard severance offer, which varies by market. The offer includes payment based on completed service and base pay, as well as career transition services, which includes career coaching and job search assistance."
About 60,000 Microsoft employees are eligible to consider a buyout. HR experts say the payout is only one part of the decision.
Craig T Fruchtman/Getty Images
With Microsoft offering about 60,000 staff buyouts, many will be deciding whether to take one.
Business Insider asked HR experts what advice they'd give workers offered buyouts.
Their advice included budgeting for a longer job search and pricing out replacement health coverage.
About 60,000 Microsoft employees have a choice to make: take a buyout and leave at the end of the year, or stay.
Eligible employees have until early December to decide. Offers reviewed by Business Insider vary by level, location, and length of service.
For US employees at levels 64 and below, the cash offer is one week of base pay for every six months of service; at levels 65 to 67, it is two weeks for every six months. The offers also include continued stock vesting and health insurance.
Buyouts are a reasonably common offering for corporations looking to cut costs, but deciding whether to take one can be difficult. Business Insider spoke to two HR experts to ask which factors employees should weigh and which questions they should ask before signing.
Read their top tips below:
Work out what the offer is really worth
"The number is important," Marjo Miles, founder and principal consultant at The Ember Effect, told Business Insider. "But really, there’s more than that number."
Employees should check what happens to their stock, paid time off, health coverage, and any bonus or commission due after they leave, Miles said. They should calculate how long the payout would cover household expenses after tax and deductions.
Deborah Saneman, CEO of workforce management and HR technology company Würk, told Business Insider that employees should price out replacement health insurance: how long coverage lasts, what they would pay monthly, and whether the company covers any of the premium.
She also recommended checking which shares would vest after their exit. "The headline number is only part of the picture, so get the details in writing," she said.
Plan for a longer job search
"Whatever somebody thinks their job search is going to take, double it in your mind and plan for that," Miles said.
She suggested using the time before the deadline to explore options. "Instead of deciding today, maybe start your job search today, she said.
Contacting people in their network and applying for roles could give employees a clearer sense of their prospects before they commit to leaving.
Saneman said employees should ask about career coaching, outplacement, or training. "A payout covers your bills, but help with the search itself can shorten the runway," she said.
Consider what staying could look like
Turning down a buyout does not guarantee job security, Miles said, though she cautioned against assuming layoffs will follow. Companies could leave vacant roles unfilled or take other steps to meet a savings goal.
"There are a lot of different ways that organizations can strategically get to their goal without just immediately doing a reduction," she said.
Saneman also cautioned against predicting what Microsoft or any other company might do next. "The benefit of a buyout is that it's on your own terms and gives you time to plan your next steps," she said. "A layoff may not."
Miles suggested asking how departing colleagues' work would be redistributed and what support would be available.
Saneman said employees should consider their longer-term plans: "The right choice is the one that fits where you want your career and your life to go, not just the one that looks best on paper."
Questions to ask before taking a buyout
Business Insider asked Saneman and Miles to share what questions they'd advise employees considering buyouts to ask. Read their four key questions below:
Would I be eligible for rehiring?
"Microsoft is a large organization, and professional paths may cross again in the future," Miles said. That may not make or break the decision, but it is worth knowing.
Will the payout be a lump sum or continued salary?
This can affect when the money arrives and how health insurance and other benefits are handled.
What happens to my bonus or commission?
Employees should check whether they will receive any payment due after their exit date and have the answer documented by HR.
What help will I get finding another job?
Saneman suggested asking about career coaching, interview preparation, and training to build new skills.
Microsoft offered buyouts to more than a quarter of its employees on Monday.
David Ryder/Reuters
Microsoft recently offered voluntary exit packages to some employees. It's the company's second buyout offer this year.
Some Google workers have said they want buyouts offered before layoffs, and to more employees.
Buyouts might soften job cuts, though broad offers could also send top talent out the door.
Voluntary buyouts are gaining momentum in Big Tech.
On Monday, Microsoft offered the exit packages to some of its employees for the second time this year, its latest attempt to slim its workforce without layoffs. In April, the company launched its first broad voluntary retirement program, offering packages to thousands of longtime US employees.
Separately, workers at Google pressed the search giant this past summer to make voluntary buyouts a standard first step whenever it plans job cuts — and to extend them to all members of affected teams, regardless of tenure.
Outside tech, Skydance, the company formed by the merger of Paramount and Warner Bros. Discovery, told employees Monday that it would require five days a week in the office. Employees unwilling to comply might be eligible for a buyout.
The developments are raising broader questions in tech, where many once-scrappy startups are now sprawling corporations — and where repeated rounds of layoffs have eliminated scores of jobs in recent years.
Now that many tech companies have workforces that include employees with decades of service, are buyouts —long part of the workforce-reduction playbook at legacy companies from Boeing to General Motors — a fairer, less painful way to reduce head count than layoffs? And should they remain reserved for veteran employees, as they traditionally have been, or be offered more widely?
"Buyouts are becoming increasingly compelling for older Silicon Valley companies," said Laszlo Bock, a former Google head of human resources who now advises CEOs. "They have more eligible people, and it's a softer message for morale."
A 'more humane' approach
Nearly 100 Google employees rallied in July outside the company's Mountain View headquarters, arguing that the company's past use of selective exit offers should be made a broader, more consistent policy. As part of the event, the union presented a petition signed by more than 4,500 Googlers calling for improved layoff protections.
Voluntary buyouts "provide agency to workers," Emma Jackson, a Google employee of more than 20 years and a leader of the Alphabet Workers Union, previously told Business Insider. Alphabet is Google's parent company.
Jackson said workers nearing retirement might have accepted buyouts in earlier rounds of layoffs at Google, reducing the number of cuts needed. She called the approach "more humane."
Google didn't respond to a request for comment from Business Insider. Alphabet said in July that its workforce had grown by nearly 12,000 employees over the prior year, reaching about 199,000 at the end of June.
With Microsoft's latest voluntary buyouts, the company said around 60,000 employees — or more than a quarter of its workforce — will be eligible and that the terms will be similar to its standard severance. They will have until early December to decide whether to take the offer and exit at the end of the year, and there are no plans for another buyout at this time, a spokesperson said.
Microsoftmade its voluntary retirement program available to employees whose age and years of service added up to at least 70, meaning some could qualify well before a conventional retirement age.
At 47, retirement wasn't on Marisela Cerda's radar. Yet Cerda, a principal customer experience manager at Microsoft who joined the company after college in 2001, was among those who received an exit offer this past spring.
Although she ultimately decided to stay, Cerda previously told Business Insider that she stuck around as long as she has because of the opportunity to keep learning about emerging technologies and the relationships she has built with colleagues. The offer prompted Cerda to think more urgently about the next phase of her career.
"You move toward what you want more of, versus moving away from things you don't want," she previously said.
Why the calculus may be changing
As Silicon Valley companies grow older alongside their workforces, buyouts may grow more attractive, said Josh Bersin, an HR analyst and consultant. Forcing veteran employees to leave through layoffs "creates a lot of bad blood," he said.
Peter Rahbar, a New York employment attorney and cohost of the "Across the Bar" podcast, said buyouts might not reduce staff as quickly as layoffs, but they don't carry the same "huge" morale costs for those who remain — or for potential future hires.
"How you treat people on the way out is certainly something people look at on the way in," he said.
There are downsides for employers, however. Offering buyouts can make labor reductions less predictable, said Jay Zagorsky, a professor at Boston University's Questrom School of Business. If too few employees accept, a company may still need to make cuts to reach its target.
"With a layoff, there's certainty," he said.
Extending buyout offers to everyone, including those who've logged only a few work anniversaries, also carries drawbacks.
"People whom you would prefer to stay might leave," and they could go to a competitor, said Bock, the former Google executive.
The risk is especially concerning for companies with what he calls "spiky talent," where a small number of employees create disproportionate value.
For workers who receive a buyout offer, Rahbar, the employment attorney, said they should understand how accepting it would affect their retirement benefits, stock awards, deferred compensation, and healthcare coverage. Depending on a company's plans, employees who retire may continue vesting in certain benefits or retain those they have already earned, he said.
Buyout packages also tend to be more generous than the severance offers, Rahbar added, and there's an emotional difference between choosing to leave and being told to go.
"People are feeling good about leaving on their own terms," he said. "With a layoff, they're clearly not."
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An earlier version of this story appeared on July 27, 2026.
Microsoft is offering buyouts to about 60,000 employees.
The offers are individualized to each employee based on their level, location, and tenure.
Business Insider reviewed offers to show what employees get when they leave the company.
As Microsoft sends out its buyout offers to more than a quarter of its workforce, specific offers reviewed by Business Insider reveal exactly what employees get if they choose to leave the company.
The offers are individualized for each employee based on their level, location, and tenure. Those reviewed by Business Insider confirm that the US buyouts align with the company's US standard severance offers. A Microsoft spokesperson said about 60,000 employees would be eligible for the buyout.
Microsoft uses a levels system to represent seniority, from entry levels starting at 59 to senior levels at 70, or vice president. The company offered buyouts to employees on select teams in the US, Canada, India, and the UK at level 70.
Offers reviewed by Business Insider show employees at internal levels 64 and below were offered one week of base pay per six months of service, and employees at levels 65 to 67 were offered two weeks of base pay per six months of service.
Buyout offers also include continued regular stock vesting and health insurance. The standard stock-vesting severance offer is six or 12 months for levels 67 and below, based on years of service.
Eligible employees will have until early December to decide whether to take the offer and exit at the end of the year, and there are no plans for another buyout at this time, a Microsoft spokesperson said.
Standard severance is capped at 39 weeks of base pay for levels 67 and below, while the standard severance offer for level 68 includes 12 months of salary.
Earlier this year, Microsoft rolled out a voluntary retirement program for employees. About 7% of Microsoft's US workforce, or about 8,750 people, were eligible at the time. As Business Insider previously reported, Microsoft's voluntary retirement program offer also aligned with the company's standard severance offer, including continued regular stock vesting for six or 12 months, based on years of service.
Earlier this year, another tech giant, Google, offered buyouts to staff in its business unit, Business Insider previously reported.
As more tech companies offer buyouts, some human resources professionals previously told Business Insider that this approach could soften job cuts, and also that when they're made available to workers of all tenures, companies risk losing talent.
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