Workflow
Microsoft Stock Up More Than Amazon. Don't Buy Into AI-Staff Cuts
MicrosoftMicrosoft(US:MSFT) Forbesยท2025-07-28 19:10

Core Insights - The article discusses the impact of job cuts related to AI investments on stock performance, highlighting that only Microsoft has consistently outperformed the market among the companies that announced layoffs [3][4][5]. Company Performance - Microsoft has seen a stock price increase of 22.7% and has cut 15,000 jobs in total to reorient its business towards AI [5]. - Wells Fargo's stock increased by 20%, with a 23% reduction in headcount over five years, indicating a strategy that embraces attrition [5]. - Other companies like Loomis, Bank of America, Verizon, Amazon, Intel, and Union Pacific have also announced job cuts but have not consistently exceeded revenue expectations, leading to mediocre stock performance [3][4][11][12][13]. Stock Market Reactions - On average, companies announcing job cuts related to AI have only slightly outperformed the S&P 500, with an average stock price increase of 9.3% compared to the S&P 500's 8.9% rise as of July 25 [3][4]. - Job cut announcements typically result in minimal stock price increases, often around 2%, and these gains are short-lived [6][7]. Factors Influencing Stock Performance - Companies that consistently beat revenue and earnings expectations and provide positive guidance tend to see better stock price reactions [8][9]. - Microsoft stands out as it has surpassed revenue and EPS expectations for the last four quarters and provided positive future guidance [9][10]. Challenges Faced by Other Companies - Amazon and Intel have struggled to meet investor expectations, with Amazon failing to consistently exceed revenue estimates and Intel missing EPS expectations [11][12][13]. - Companies that focus on job cuts may deter top talent, potentially hindering future growth [14]. Summary of Job Cuts and Stock Changes - Loomis: +12.3% [15] - Bank of America: +9.4% [15] - Verizon: +7.1% [15] - Amazon: +5.1% [15] - Intel: +2.4% [15] - Union Pacific: -4.4% [15]