Microsoft’s AI push tied to $25bn debt, buyouts

Microsoft has raised $25 billion in a US investment-grade bond sale, its first such debt offering since 2017, to help fund rising capital needs tied to artificial intelligence and cloud infrastructure. The proceeds are earmarked for general corporate purposes, including capital expenditure, as the company prepares for a substantial build-out of data centres, servers and related AI facilities. Microsoft projects around $175 billion of capital expenditure in 2026, reflecting the scale of its infrastructure plans as Azure and AI demand continue to grow.

Demand for the bond sale was strong, with orders reportedly reaching about $115 billion, several times the amount on offer. The notes were issued in multiple tranches maturing between 2028 and 2066 and are scheduled to close on November 4. Executives have highlighted that access to debt markets, supported by the company’s credit ratings, provides long-term funding flexibility for these investments.

Just days before pricing the bond issue, Microsoft launched a voluntary exit programme covering about 60,000 employees at level 70 and below in participating teams. The offer applies to staff in the US, India, Canada and the UK and represents more than a quarter of Microsoft’s roughly 223,000 full-time workforce. Eligible units include AI experiences, Copilot, finance, human resources, Xbox and Windows + Devices, while marketing, commercial business and security are excluded. The programme is described as time-limited, voluntary and designed to support employees making career transitions with company assistance.

Internally, some employees debated the implications of making buyouts available to such a large group, including whether roles might be replaced by AI or whether more layoffs could follow. Executives have said the company does not intend to shrink by 60,000 people and that it is not replacing everyone with AI. In at least one major organisation, Copilot Platform and AI agents, the offer was extended broadly, including to people in critical roles, with managers prepared to backfill key positions if those employees leave.

Despite the programme’s scale, Microsoft expects relatively few employees to participate. A company spokesperson has said the number of takers is anticipated to be 3,000 or fewer, equivalent to about 5% of those eligible. Chief Financial Officer Amy Hood has told staff that very few employees are expected to choose the offer because of the growth opportunities available at the company.

Some divisions within the Cloud + AI organisation have handled the offer differently, with certain hardware and infrastructure teams opting not to participate while most other groups did. Executives say they can backfill some roles in the Cloud + AI division if needed, aiming to limit disruption as AI and cloud projects continue. This follows earlier workforce measures, including voluntary retirement offers to about 9,000 US employees earlier in the year and 4,800 job cuts announced in July as part of a broader restructuring.

Microsoft’s simultaneous pursuit of large-scale AI infrastructure investment and targeted workforce reductions has drawn attention, given the potential impact on its long-term AI roadmap. The company’s capital plan is driven by rapid growth in Azure, with Azure revenue rising 48% last quarter and demand described as exceeding supply. Revenue for the wider group rose 19% and operating income increased 21%, supporting the case for sustained investment.

While the bond and buyout initiatives are described as separate corporate decisions, together they show Microsoft reshaping both its balance sheet and its workforce to align with AI and cloud priorities. The company plans to outline more detail on its AI and cloud strategy at its Ignite conference scheduled for November 17 to 20, against a backdrop of significant capital commitments and organisational change.