Xbox sales slump as Microsoft’s cloud and AI revenues surge

Microsoft’s fourth-quarter financials indicate that Xbox’s content and services segment, such as the Game Pass subscription, slipped 10% over recent months, while hardware sales dropped 14%. The decline comes after Xbox chief Asha Sharma unveiled a restructuring strategy that involves significant staff cuts and the sale of four game studios, plus a planned $100-plus price increase for consoles starting August 1. In contrast, the company’s cloud division surged 27% to $59 billion, and its productivity segment—including Microsoft 365 and LinkedIn—rose 14% to $37.8 billion.

Microsoft also reported a 7% fall in its Windows OEM and devices segment, citing weaker PC demand. The mixed results highlight a shift in the firm’s focus toward cloud and AI growth while its traditional gaming hardware business contracts.