Microsoft announces performance-based job cuts across all departments.

• Across departments, Microsoft is reducing a minimal number of jobs based on performance.
• Microsoft confirmed job cuts through an email from a spokesperson stating, "We take the appropriate action when people are not performing."

The company confirmed to CNBC on Wednesday that it is cutting a small percentage of jobs across departments based on performance.

"A Microsoft spokesperson stated in an email to CNBC on Wednesday that the company's focus is on high-performance talent and helping individuals learn and grow. The spokesperson added that when individuals are not meeting expectations, the company takes the necessary action."

Business Insider reported on the plans late Tuesday.

Less than 1% of employees will be affected by the job cuts, according to a source who requested anonymity to disclose confidential information.

Despite Microsoft's net income margin of nearly 38% being close to its highest since the early 2000s, the company's stock underperformed its peers last year, rising only 12% while the Nasdaq gained 29%.

Microsoft's latest cuts are slim compared to recent downsizing efforts.

In January 2024, three months after completing the $75.4 billion Activision Blizzard acquisition, Microsoft's gaming unit shed 1,900 jobs to reduce overlap.

As 2025 approaches, Microsoft's relationship with OpenAI, the AI startup it has invested over $13 billion in, becomes increasingly uncertain. This partnership played a significant role in boosting Microsoft's market cap to over $3 trillion last year.

Last month, Microsoft CEO Satya Nadella discussed the relationship with investors Brad Gerstner and Bill Gurley on a podcast, using the phrase "cooperation tension."

Microsoft 365 Copilot, powered by OpenAI technology, has not yet gained widespread adoption in businesses. According to UBS analysts, Copilot rollouts at Microsoft's Ignite conference were slow and underwhelming.

Microsoft continues to highlight its growth prospects, with Finance chief Amy Hood stating in October that revenue growth from Azure cloud will accelerate in the first half of this year due to increased AI infrastructure capacity.

Microsoft intends to invest $80 billion in developing AI technology this year.