Microsoft had another big quarter on paper. Xbox, however, did not.
Microsoft announced strong financial results for the second quarter of fiscal year 2026, with revenue reaching $81.3 billion – a 17% increase compared to the same period last year. This growth was primarily fueled by its cloud services and artificial intelligence offerings. Microsoft Cloud revenue totaled $51.5 billion, and Azure, its cloud platform, saw a significant 39% increase. Overall, most of Microsoft’s businesses are performing well.
Xbox was the clear exception.
Xbox Revenue Fell Across The Board
Microsoft’s latest report shows that revenue from Xbox content and services decreased by 5% compared to the same time last year. While Microsoft didn’t break down the numbers for specific services like Xbox Game Pass, they explained the drop was mainly because last year saw particularly strong sales of their own games. However, this slowdown in Xbox growth is noticeable and appears to be continuing for now.
Hardware was an even bigger concern.
Microsoft reported a 32% decrease in revenue from Xbox hardware sales this past quarter. While the company didn’t share specific console sales figures, the trend is evident: Xbox console sales are declining. Microsoft is increasingly focusing on Xbox as a service – like Game Pass – rather than just a hardware provider.
The latest financial results reveal a significant change in Xbox’s performance. While revenue from games and services grew strongly throughout most of the last fiscal year, with several quarters showing double-digit increases, that growth has stalled. The most recent quarter shows a decline in revenue.
Although Xbox revenue decreased this quarter, growth in other areas of the business helped offset the loss. Revenue from Windows computers and devices increased by 1%, and advertising on search and news platforms rose by 10%. This highlights that Xbox isn’t performing as well as other parts of Microsoft that directly reach consumers.
Microsoft as a whole is still performing well financially, but Xbox is facing increasing challenges. Sales of Xbox Series X|S consoles are declining as the hardware gets older, and growth in game content appears to be slowing down. This is making Microsoft’s future plans for the Xbox platform less clear.
Stay updated on the latest gaming news – including the recent departure of the Amazon Game Studios head. Plus, don’t miss out on even more TopMob content delivered straight to your inbox – subscribe to our weekly newsletter!
Written by
Mike Straw
Mike has been a gaming journalist since 2012, covering major industry events and also working as an investigative reporter.
More from Mike Straw
Level Up Your Gaming News
App Store
Google Play
Read More
- How to Unlock the Mines in Cookie Run: Kingdom
- Gold Rate Forecast
- Top 8 UFC 5 Perks Every Fighter Should Use
- How To Upgrade Control Nexus & Unlock Growth Chamber In Arknights Endfield
- Deltarune Chapter 1 100% Walkthrough: Complete Guide to Secrets and Bosses
- Solo Leveling: From Human to Shadow: The Untold Tale of Igris
- Jujutsu: Zero Codes (December 2025)
- Byler Confirmed? Mike and Will’s Relationship in Stranger Things Season 5
- Where to Find Prescription in Where Winds Meet (Raw Leaf Porridge Quest)
- Quarry Rescue Quest Guide In Arknights Endfield
2026-01-29 00:48