Microsoft cut 4,800 jobs then applied for 2,879 foreign-worker visas. Despite the outrage, it’s not why its market value is down $1.2T since October

By then, the stock had already shed about $1.2 trillion in value since its peak last October.

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.

What 4,800 jobs did Microsoft cut?

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. 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.” Microsoft President and Vice Chair Brad Smith also told Geekwire that: “Microsoft can only be a strong employer if it has a successful business.”

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.

Microsoft ran its first voluntary retirement program this spring and summer, and about 30% of roughly 8,750 eligible U.S. employees took it. Those retirements were voluntary, which cut down how many people were laid off outright.

The $190 billion bill

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.

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%, free cash flow — what’s left after all that building — slipped to $15.8 billion from $20.3 billion a year earlier.

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 roughly $1.2 trillion by the day of the layoffs, a 30% drop in nine months.

Why the visa number spread

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.