Microsoft offers buyouts to 60,000 employees, borrows $25 billion to fuel AI push

Microsoft made two major financial and workforce moves in quick succession. It offered voluntary exit packages to eligible employees in India, the US, Canada and the UK. It also priced $25 billion of bonds, its first US investment-grade offering since 2017.

The buyout offer gives some employees a supported choice to leave. It applies to eligible staff at level 70 and below in participating teams, including AI experiences, Copilot, finance, HR, Xbox and Windows + Devices. Microsoft expects 3,000 or fewer people to accept. The bond sale gives Microsoft money from investors, which it plans to use for general corporate purposes, including capital spending.

The timing highlights Microsoft’s competing priorities. It is reshaping parts of its workforce while investing heavily in AI and cloud infrastructure. Azure revenue rose 48 percent, demand exceeds supply, and Microsoft has forecast about $175 billion in capital expenditure for 2026.

A corporate bond is a form of borrowing issued by a company. Investors buy the bond and provide cash to the business. In return, the company promises to pay interest, known as the coupon, and repay the borrowed amount when the bond matures.

Microsoft sold ten groups, or tranches, of notes with maturity dates from 2028 to 2066. Fixed-rate coupons ranged from 4.85 percent to 6.35 percent, while two $1 billion tranches had floating rates. Investors therefore know the payment terms, though some rates can change.

This lets Microsoft raise a large amount without selling new shares. The company said the proceeds would support general corporate purposes, including capital expenditure. Borrowing adds future interest and repayment obligations, but Microsoft’s AAA ratings helped it access investors at attractive terms and drew $115 billion in orders.

The bond sale was worth $25 billion, making it Microsoft’s largest US investment-grade offering since its $17 billion borrowing in 2017. Investors placed $115 billion of orders, about 4.6 times the amount Microsoft offered.

The voluntary exit offer covers more than a quarter of Microsoft’s 223,000 full-time employees. The article describes the eligible population as about 60,000 staff at level 70 and below in participating teams across India, the US, Canada and the UK. Participating groups include AI experiences, Copilot, finance, HR, Xbox and Windows + Devices.

Microsoft expects 3,000 or fewer employees to take the offer. That equals 5 percent or less of those eligible. The company previously offered voluntary retirement to about 9,000 US employees, with roughly one-third accepting, showing that voluntary programmes can produce different results.

Investors were willing to place $115 billion of orders because Microsoft is viewed as an exceptionally strong borrower. Microsoft and Johnson & Johnson are the only publicly traded US companies with AAA ratings from both Moody’s and S&P, according to the article.

Those ratings signal very high credit quality. Microsoft offered notes across ten maturities, from 2028 to 2066, giving investors different time horizons. Fixed-rate coupons ranged from 4.85 percent to 6.35 percent, and two tranches offered floating rates. The variety helped attract different kinds of buyers.

Microsoft’s financial position also supported demand. It reported positive free cash flow for the quarter, unlike Alphabet, Meta and Amazon. The company’s revenue rose 19 percent and operating income increased 21 percent. Strong demand for Azure, whose revenue climbed 48 percent, added to confidence in its business.

A voluntary buyout is an employer’s offer of support to employees who choose to leave. The support may include financial compensation or other benefits, although the article does not specify the package terms. Microsoft calls its offer time-limited and voluntary.

The distinction is choice. Eligible Microsoft employees can decide whether to accept the offer and leave on their own terms. Layoffs or compulsory redundancies are employer-directed job cuts, where selected employees must leave rather than choosing from an offer. Microsoft’s Chief People Officer said the programme lets employees make the transition with support.

The offer covers participating teams and employees at level 70 and below in four countries. Marketing, commercial business and security are excluded. Microsoft expects 3,000 or fewer people to accept, far below the roughly 60,000 who are eligible.

Microsoft said bond proceeds would support general corporate purposes, including capital expenditure. That matters because its AI data-centre bills are rising, and the company has forecast about $175 billion in capital expenditure for 2026. The workforce offer may also help Microsoft adjust staffing while giving some employees a supported exit.

AI services need large data centres with powerful computing capacity. Building and expanding that capacity requires major investment before enough revenue is generated to recover it. Microsoft said Azure demand continues to exceed supply, and its engineering teams are working to deliver capacity faster. Azure revenue rose 48 percent in the quarter.

The two moves reflect that expansion pressure. Microsoft is borrowing while keeping positive free cash flow, unlike Alphabet, Meta and Amazon in the reported quarter. It expects few buyout takers, but the programme offers flexibility as investment shifts toward AI, cloud services and related capacity.

Debt gives a company cash today in exchange for future interest payments and repayment. It does not normally dilute existing ownership, but it creates obligations. Microsoft’s $25 billion bond sale is debt financing, with notes maturing between 2028 and 2066.

Company-generated cash comes from the business’s own operations after expenses and investments. It can fund projects without new borrowing or selling ownership. Microsoft reported positive free cash flow for the quarter, while Alphabet, Meta and Amazon reported negative figures. Cash funding avoids new debt, but it depends on how much cash the business produces.

Issuing new shares raises money by selling part ownership of the company. It does not require repayment like a bond, but it can reduce existing shareholders’ percentage ownership. Meta chose equity instead of debt for its $25 billion raise. Companies can combine these methods when major investments, such as AI infrastructure, require substantial capital.