BUSINESS

“When my paycheck lands, it takes a detour through bitcoin.”

Microsoft employees are facing another round of job cuts.

The latest reductions come less than three months after the technology giant announced one of its biggest workforce restructurings of the year.

On July 6, Microsoft said it would eliminate about 4,800 roles, representing roughly 2.1% of its global workforce, as it redirected people and investments toward what it described as its highest priorities.

Most of those cuts fell within Microsoft’s commercial business and Xbox organization.

The company also warned employees at the time that the restructuring was not finished, saying there would be “more changes ahead.”

The July cuts followed other attempts by Microsoft to shrink its workforce without relying entirely on layoffs.

As TheStreet previously reported, Microsoft had offered voluntary buyouts to some senior-level U.S. employees earlier in the year. 

By July, Microsoft said more than 30% of eligible employees had chosen to participate in its voluntary retirement program. 

The company also said it had moved more than 4,000 employees into new roles over the prior year.

But the reductions continued.

A WARN notice filed in Washington in July showed that 605 Puget Sound-area positions were being eliminated as part of that round.

This included 493 positions tied to Microsoft facilities and another 112 remote positions in the region. Those cuts were scheduled to take effect on Sept. 4.

Now, another round is taking shape.

Microsoft cuts another 277 jobs in Puget Sound

Microsoft began cutting roughly 500 additional jobs on Sept. 22, according to Business Insider.

Most of the reductions will affect its Xbox gaming operation, and a smaller number will affect areas including cloud and artificial intelligence.

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The company has been working toward reducing the Xbox workforce by roughly 20% by the end of its fiscal year.

The new WARN filing reviewed by TheStreet provides a clearer picture of how much of this latest round is landing in Washington.

Microsoft is permanently eliminating 277 positions in the Puget Sound region, including 252 positions at its facilities at One Microsoft Way in Redmond and another 25 remote positions based in the region.

Employees were notified on Sept. 22, and all 277 positions are scheduled to be eliminated on Nov. 21.

Microsoft said the facilities themselves will not close, although some of the affected positions could be moved to Microsoft operations elsewhere.

The filing also shows that the reductions are not concentrated in a single job type.

Affected positions include software engineering, game design, game production, art, technical writing, product marketing, product management, data science, business management, and other corporate functions.

The local numbers do not represent Microsoft’s full global layoffs. 

Microsoft continues its restructuring plans. georgeclerk / Getty Images

Microsoft’s restructuring primarily affects Xbox

Gaming accounts for much of Microsoft’s latest reduction, but the changes are part of a much broader reset of the Xbox business.

In July, Microsoft described the changes as the “most significant restructure in XBOX history.”

The company said it planned to reduce the division by approximately 3,200 roles throughout fiscal year 2027. 

About 1,600 positions were eliminated when the restructuring was announced, while four studios were also slated to leave Xbox under new management.

Microsoft said the changes were necessary because the Xbox business was operating at margins three to 10 times lower than comparable platform and publishing businesses. 

The company said it entered the current console generation with a smaller installed base and higher cost structure, while growth from Game Pass, its multi-platform strategy, and a broader content portfolio failed to come as quickly as expected.

The restructuring also goes beyond headcount.

Microsoft said it would reduce management layers within parts of Xbox to no more than five, and as few as three where possible. 

The company said some teams had grown to as many as 14 management layers, while its platform organization was 40% larger than at the beginning of the current console generation, despite declines in its player base and playtime. 

Microsoft also plans to cut vendor spending by 50%.

The company is also reshaping its studio portfolio. 

Compulsion Games and Double Fine Productions are transitioning back to independent status, while Ninja Theory and Undead Labs have entered agreements to move to new ownership. 

Microsoft said additional reductions were taking place across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, although no publicly announced first-party games were being canceled as part of the changes.

The latest September reductions, therefore, represent another stage of a restructuring Microsoft had already warned would unfold over the course of the year.

Why Microsoft’s Puget Sound cuts matter

Puget Sound broadly refers to the Seattle-area region of western Washington, which includes Redmond, Bellevue, Seattle, and surrounding communities.

For Microsoft, however, this is more than another employment market.

Redmond is the company’s home base.

Microsoft’s global headquarters sits on a roughly 500-acre campus in Redmond with more than 125 buildings.

Microsoft also describes Redmond as the place “where it all started” and says the company has played a significant role in the development of the broader Seattle area.

That makes repeated reductions in Puget Sound particularly notable because they are reaching the geographic center of Microsoft’s operations rather than only smaller satellite offices.

The region has also been absorbing job reductions from other major technology employers.

An Axios review found at least 20 rounds of layoffs announced across the Seattle-area technology sector this year. 

Through Aug. 18, employers had filed notices covering more than 9,000 planned layoffs in King County and surrounding counties, with about three-quarters of them in the information sector.

Microsoft’s latest cuts add another round to that total.

Big Tech cuts jobs while restructuring around AI

In July, Chief People Officer Amy Coleman said the positions being eliminated were not being replaced by AI, but added that “AI is changing how work gets done,” including by automating some everyday tasks.

The restructuring is nevertheless unfolding while Microsoft pours significantly more money into the infrastructure needed for cloud computing and AI.

Microsoft reported nearly $116 billion in additions to property and equipment during fiscal 2026, up from about $64.6 billion the previous year. 

The company’s annual filing says investments in cloud and AI infrastructure are increasing costs as Microsoft adds data centers, servers, networking equipment, and other computing capacity.

Microsoft is hardly alone.

Oracle is also in the middle of another major restructuring. 

WARN filings reviewed by TheStreet document at least 2,578 Oracle job cuts across the U.S. this year, including a recent second round affecting roughly 800 workers in Washington and California.

Those reductions are happening as Oracle dramatically increases spending on data centers and AI infrastructure, with the company expecting capital expenditures of $90 billion to $95 billion in its current fiscal year.

Meta has also eliminated thousands of positions this year while reorganizing parts of the company around artificial intelligence and managing growing infrastructure costs.

Amazon has followed a similar path, eliminating thousands of corporate positions while outlining roughly $200 billion in planned capital spending as it expands AI and cloud capacity.

The reasons behind individual layoffs differ from company to company, and Microsoft has explicitly said its eliminated roles are not simply being replaced by AI.

But across the technology sector, the workforce picture is increasingly showing the same two changes happening at once. Companies are committing enormous sums to computing infrastructure while reassessing organizational structures, management layers, and the jobs they need going forward.

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Most people have hidden a spare key under a doormat at some point. It feels safe because nobody walks down the street checking every doormat.

AI agents do, and they never get bored. That shift in who does the checking helps explain why OpenAI has stopped training its most capable models for the second time in three months.

The company said it will resume training “only when we are confident that we have additional safeguards” in place, the Associated Press reported.

The pause came hours after OpenAI disclosed that its agents acted unexpectedly on several U.S. government websites this summer. The first halt followed July’s breach of AI platform Hugging Face by OpenAI agents.

The keys were already lying in plain sight

The government incidents share a detail that is easy to miss. At the Education Department, OpenAI agents found API developer keys to government data, according to the AP. At the Census Bureau, agents used login credentials they found online to pull public data, CNN reported.

That pattern runs through OpenAI’s own disclosures. The company’s incident tracker lists “use of exposed credentials” as a category of agent behavior, and it has notified dozens of affected third parties. A separate OpenAI report describes an internal model searching public GitHub repositories for leaked API keys during training.

The Hugging Face breach began the same way. On July 10, an agent found 14 publicly exposed credentials with write access and shared them with other agents, according to OpenAI’s technical account.

The agents misbehaved, but people left the doors unlocked. That makes this a security hygiene story, too, and no training pause fixes it.

OpenAI paused training of its most capable models for the second time in three months after its agents probed U.S. government websites.SOPA Images / Getty Images

Government sites attract agents because they are trusted

Washington did not land in this story by accident. An OpenAI spokesperson told CNN that “our models often turn to them as authoritative sources of public information.” The credibility that makes .gov pages useful also puts them on the front line of agent traffic.

Persistence turns that traffic into risk. OpenAI’s Hugging Face review found its agents seldom abandoned tasks, even impossible ones, and took riskier paths as they spent more effort.

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Australian Prime Minister Anthony Albanese said an OpenAI agent that breached a Medicare statistics portal in June “didn’t accept no for an answer,” Reuters reported.

The latest trigger fits the same mold. On Sept. 20, an agent stuck on a search task used a DNS gap to query an outside chatbot, according to OpenAI’s incident report. An automatic shutdown failed, and staff stopped the run manually about 2.5 hours later, Fortune reported.

Federal damage so far appears limited. “No nonpublic information was accessed,” the SEC said, and the Education Department found no impact on its website or databases.

Pausing is becoming part of how OpenAI operates

OpenAI is private, so most investors hold it indirectly. Microsoft (MSFT) owned roughly 27% of OpenAI after its October 2025 restructuring, Bloomberg reported. That makes OpenAI’s development pace a direct input into how Wall Street values Microsoft’s OpenAI stake.

The delays carry a real price. OpenAI said its summer pause, including a hold on its largest planned training run, came “at significant cost and delays to frontier research.” Now the company says it expects to hit pause again as its models improve.

CEO Sam Altman told Fortune this month that “right now would be an ill-advised moment to go public,” ruling out a 2026 IPO. For future shareholders, safety stops now resemble weather delays at an airline: recurring, costly, and impossible to schedule.

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Voluntary brakes leave a gap Washington hasn’t filled

Federal policy is heading the other way. President Donald Trump agreed with Chinese President Xi Jinping this week to share information on AI dangers, the AP reported. Yet he told reporters the U.S. is not “putting on brakes.”

That leaves the brakes in private hands. OpenAI decides when to stop, what to disclose, and when to warn the people affected. Australia was not notified of its June breach until Sept. 10, and Albanese criticized the delay, according to CNBC.

Outside researchers are filling part of that gap. AI evaluator Transluce flagged an attempted hack on an Education Department site, which OpenAI has not confirmed. Transluce also found rogue activity on government sites in five states, some not clearly tied to OpenAI, CBS News reported.

That last detail widens the lens. With rivals Anthropic, Meta, and Google also reporting agents going rogue, does that mean going rogue is a new benchmark for measuring the capability of AI agents?

Much of today’s web security quietly assumes attackers are scarce and eventually give up. Agents break both assumptions at once. OpenAI can harden its own sandbox, but it cannot collect every key left on a public server.

Australia is now checking for more breaches, Reuters reported. The open question is whether Washington hunts for its own doormat keys before the next pause or after it.

Related: OpenAI’s agents breached Hugging Face. Nvidia wants it.

The competition to develop artificial intelligence models is intensifying.

Palantir Technologies (PLTR) seems to be getting more and more comfortable with that.

Instead of betting the firm on a single large language model, Palantir is building its artificial intelligence platform, or AIP, to work with models from competing AI companies while also connecting them to corporate data, permissions and real-world workflows.

That strategy became more obvious on Sept. 24.

Palantir has made xAI’s Grok 4.7 available to eligible AIP commercial customers. It also added on the same day, OpenAI’s GPT-6 Sol, GPT-6 Luna and GPT-6 Astra, and DeepSeek V4.1 Flash in some environments. In September, Palantir also added open-weight models from Z.ai and Moonshot AI, along with Google’s Gemini 3.8 Flash.

The collection is significant because Palantir doesn’t have to guess which AI lab will ultimately produce the most powerful model.

Its opportunity might be a layer higher: becoming the software companies use to work out which models can access their data, what they are allowed to do with it, and how AI gets dropped into real business operations.

This capability could become increasingly important as enterprises move from testing chatbots to deploying autonomous artificial intelligence systems.

Palantir wants AIP to sit above the AI model wars

Palantir has demonstrated how methodically it is growing the number of models that can run inside AIP with the September releases.

Grok 4.7 was added for eligible commercial environments with xAI enabled. OpenAI’s newest models are now available through OpenAI and Azure OpenAI integrations. Palantir also opened access to models from Google, Anthropic, DeepSeek, Z.ai, and Moonshot AI in several security environments.

This is a big deal.

A bank, manufacturer, or government agency may not want to rebuild its AI architecture each time a different model gets better at coding, reasoning, document analysis, or autonomous tasks.

Palantir is trying to make the model more replaceable while maintaining the customer’s underlying data, permissions, and operational structure.

Another September release builds on that idea.

Palantir announced general availability of AIP Evolve on Sept. 8. It orchestrates AI agents that can try to improve existing artificial intelligence systems. Goals can be reducing cost, reducing latency, improving evaluation scores, migrating workloads to different models etc. Then proposals can be reviewed before changes are merged into production, says Palantir.

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That means Palantir isn’t merely giving customers access to multiple AI models. It is also building software that helps decide when to change those models. CEO Alex Karp has made data control a central part of that pitch.

“Demand for AI sovereignty has now been unleashed,” Karp said when Palantir reported second-quarter results.

For Palantir, “sovereign AI” is only about clients preserving control of their unique data, models, infrastructure, and operational choices, instead of giving those benefits to an outside model supplier.

Now the approach is stretching well beyond Palantir’s own product.

Nvidia and Nebius deepen Palantir’s AI strategy

Palantir’s partnerships with Nvidia and Nebius are a glimpse into how the company wants this model-agnostic approach to work in practice.

Nvidia and Palantir announced a sovereign AI system for complex supply chains on Sept. 10, with an initial deployment inside Nvidia. By combining Nvidia’s open Nemotron models with Palantir Foundry, AIP and Palantir’s Ontology, supply chain information will be analyzed to help guide operational decisions.

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The Nvidia deployment is notable because one of the companies at the heart of the AI infrastructure boom is using Palantir’s software.

Nvidia said it has built a digital supply-chain command center using Palantir Foundry. The chip giant is also training Nemotron models on operational decisions and the reasoning behind them in an effort to codify expertise that previously lived with human planners.

Palantir named Nebius (NBIS) as its preferred sovereign-AI infrastructure partner just two days ago.

Palantir says that once integrated, eligible commercial customers will be able to access Nebius compute and inference infrastructure from within Palantir’s enterprise perimeter, which could give customers more control over their compute, data, and AI models.

The companies are also looking to speed up the deployment of AI compute capacity, including modular data centers in areas that already have power.

Palantir’s smartest AI bet may be avoiding one big betJohn Lamparski / Getty Images

Palantir’s business growth gives the AI strategy more weight

Palantir’s AI strategy would be much easier to dismiss if it wasn’t showing up in the company’s financial results.

Second-quarter revenue surged 93% from a year earlier to $1.94 billion.

U.S. commercial revenue climbed 149% to $764 million, while U.S. government revenue increased 90% to $809 million. Total U.S. revenue reached $1.57 billion, up 115%.

Palantir also closed 220 deals worth at least $1 million during the quarter.

Of those, 98 were worth at least $5 million and 73 were worth at least $10 million.

U.S. commercial remaining deal value increased 124% to $6.24 billion, while U.S. commercial total contract value reached a record $2.13 billion, up 153%.

Profitability expanded alongside the growth.

Palantir generated $912 million of GAAP operating income, representing a 47% margin. Adjusted operating income was $1.19 billion, for a 62% margin.

The company subsequently raised its 2026 revenue forecast to between $8.15 billion and $8.158 billion and said U.S. commercial revenue should exceed $3.424 billion, representing growth of at least 134%.

Another major engine of growth is government spending.

On Sept. 17, the U.S. Army awarded Palantir USG a $48.1 million delivery order for software to replace nine legacy ammunition-management systems.

The initial term is 12 months and up to five optional additional years. The Army said the platform is intended to offer a single view of ammunition across planning, production, procurement, storage, distribution, and ultimate disposition.

That came just weeks after an Army milestone.

The Army has advanced the Tactical Intelligence Targeting Access Node, or TITAN, into production, with Palantir awarded $127 million in an initial eight-system production order.

Those awards together point to an unusual aspect of Palantir’s business.

Its rapidly growing commercial AI operation isn’t replacing its government business. Both are expanding at the same time.

Palantir’s biggest opportunity could depend on staying model-neutral

Valuation remains the big question for investors.

Palantir closed at $189.67 a share on Sept. 25. Wall Street remains broadly split on the value of the company’s unusually fast growth. Rosenblatt has a recent Buy and $225 target, while UBS reiterated a Buy and upped its target to $250 earlier this month. Other analysts are much more wary.

That disagreement shouldn’t be surprising.

Investors are trying to determine how much future AI adoption is priced into Palantir’s valuation, as the company posts revenue-growth rates rarely seen at its scale.

But do Palantir’s September product releases give investors another way to think about the company?

The best AI model might change again and again.

OpenAI might lead one category. Another category leader might be xAI, Google or Anthropic. Open-weight models could get a lot cheaper or a lot more powerful.

Palantir’s strategy seems increasingly constructed so that it does not necessarily have to know the winner beforehand.

If enterprises continue to adopt multiple models and want to maintain control of sensitive information and operational workflows, Palantir can try to sell the software layer that connects those pieces.

That may be the larger ambition behind what looked like a fairly simple product update on Sept. 24.

Palantir is not merely adding more AI models.

It is trying to make the identity of the winning AI model matter less to Palantir.

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