LinkedIn Just Cut Its Israel R&D Team. Microsoft Stock Investors Shouldn’t Sweat the Layoffs.

Microsoft (MSFT) shareholders got another reminder this week that even the biggest tech players are watching expenses but are pouring billions into AI investments. The company's social network site LinkedIn is reported to be shutting down its research and development center in Israel and laying off nearly all the center's roughly 50 employees.

The Tel Aviv center opened only in 2022 when Microsoft acquired the Israeli analytics startup Oribi for an estimated $80 million to $90 million and incorporated the company's technology into LinkedIn Marketing Solutions. This number laid off is small compared to Microsoft's huge workforce, but the timing is rather interesting. On the one hand, Microsoft is increasing the budget for AI infrastructure. But on the other hand, the company is trying to find areas where expenses can be cut. That is why the move to shut down the LinkedIn center is not so much a signal about the lack of demand, but an example of resource allocation by Big Tech.