Microsoft is cutting 3,200 jobs in its Xbox gaming unit, selling four game studios and reshaping the struggling business as part of a broader restructuring announced this morning.

Why it matters: The restructuring underscores the pressure on Microsoft to improve Xbox's profitability amid the broader company's massive shift to AI and related spending.

Zoom in: Xbox will divest four game development studios and is reviewing strategic options for a fifth, Xbox CEO Asha Sharma, who took over as CEO in February, wrote in a note to staff.

• 1,600 roles in the business are being eliminated today, according to the memo.
• The business is also reducing management layers and shifting investment to focus on "higher priority projects," with a goal of reducing vendor payments by 50%.

The big picture: Microsoft announced the changes at Xbox as part of a larger restructuring impacting 4,800 roles, or about 2.1% of its global workforce.

• It all comes amid an enormous investment in AI. The company projects to spend $190 billion in 2026 — a roughly 61% jump over the previous year — much of that on AI-related infrastructure.

What they're saying: "[Xbox] has become almost irrelevant," Gil Luria, head of technology research at D.A. Davidson, said in a CNBC interview. "Every investment dollar now is going into the AI investment and into building data centers."

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Lockheed Martin agreed to acquire naval defense-tech firm Ultra Maritime for $3.45 billion from private equity firm Advent International.

• Braintree, Massachusetts-based Ultra Maritime says it provides "undersea warfare and anti-submarine warfare (ASW) capabilities for allied naval forces."

The big picture: The Strait of Hormuz situation has escalated demand for undersea autonomous weapons, both offensive and defensive, Axios' Dan Primack and Colin Demarest write.

• Elsewhere: Thales today agreed to buy Exail Technologies, a French maker of submarine drones, for €3.9 billion.

The bottom line: Aerial drones had — and are still having — a moment. Surface and subsurface seem to be next, after years of U.S. Navy leadership banging the hybrid-fleet drum. Defense companies big and small are jockeying for position.

⛳️ Versant Media, which owns networks including CNBC and the Golf Channel, inked an agreement to buy Full Swing, a golf simulation company, for about $530 million. (CNBC)

🇲🇽 🇺🇸 Toyota says it will move production of the Tacoma pickup truck to the U.S from Mexico as part of a $3.6 billion investment in its San Antonio manufacturing campus. (Axios)

📈 SpaceX will officially join the Nasdaq-100 tomorrow, with several mutual and exchange-traded funds that track the index set to buy the company's shares at today's closing price. (WSJ)

📢 Nvidia has named Anna Soellner, Reddit's former vice president of communications, as head of corporate communications. (Axios)

Dell Technologies shares jumped today after the company got a presidential plug from the Oval Office, Axios' Pete Gannon writes.

Catch up quick: CEO Michael Dell was one of several executives on hand at the White House this morning to watch President Trump ring the opening bell to celebrate the start of trading for Trump Accounts.

• 🗣️ "Go out and buy a Dell computer," President Trump said during his televised remarks, while praising the executive and his wife Susan Dell for their financial contributions to the program.

The impact: We'll see about the computers, but investors wasted no time buying Dell stock.

• 📈 Shares jumped almost 9% this morning following comments, before settling to close up 4.4%.