Microsoft reports sinking Xbox revenue as its cloud business climbs

Microsoft’s latest earnings showed a sharp 33% drop in Xbox hardware revenue and a 5% decline in Xbox content and services.

At the same time, cloud revenue rose 29% to $54.5 billion, underscoring strength in Azure and other cloud offerings.

AI and Microsoft 365 products continued to grow, helping offset weakness in gaming hardware.

The results reinforce Microsoft’s shift toward cloud, AI, and productivity businesses as the main drivers of expansion.