Atlassian Corp.—controlled by Australian billionaire Mike Cannon-Brookes—is cutting 1,600 jobs, or about 10% of its workforce, as the software company steps up investments in AI amid an industry slowdown.

“We are doing this to self-fund further investment in AI and enterprise sales, while strengthening our financial profile,” Cannon-Brookes, cofounded and CEO of Sydney-based Atlassian, said in a memo to staff.

The retrenchment exercise will cost the company between $225 million to $236 million, Atlassian said in a separate regulatory filing. The company’s shares closed 3.3% lower in New York trading on Wednesday.

Atlassian shares had lost more than half of its value this year amid a broader slump in software stocks, triggered by increasing concerns over the competitive threat from emerging........

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