Xbox revenue drops 10 percent as Microsoft’s cloud and AI business surges
Microsoft’s cloud division revenue soared 27 percent to $59 billion.
by Emma Roth
Jul 29, 2026, 4:26 PM EDT
Illustration: The Verge
Emma Roth is a news writer who covers the streaming wars, consumer tech, crypto, social media, and much more. Previously, she was a writer and editor at MUO.
Xbox is having yet another tough quarter, as revenue from content and services like its Game Pass subscription dipped 10 percent over the past few months. At the same time, Xbox hardware sales declined 14 percent, according to Microsoft’s fourth-quarter earnings report released on Wednesday.
The news comes just weeks after Xbox head Asha Sharma announced a “reset” plan for Xbox that included sweeping layoffs and the sale of four games studios. Xbox also plans to raise the prices of its consoles by $100 and more starting August 1st.
Meanwhile, Microsoft has ramped up efforts in AI. Its cloud business revenue soared 27 percent to $59.3 billion this quarter, while revenue from its productivity business, which includes things like Microsoft 365 and LinkedIn, spiked 14 percent to $37.8 billion.
Xbox wasn’t Microsoft’s only segment on the decline. The company’s Windows OEM and devices segment decreased 7 percent “driven by lower PC market demand.”
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