Xbox keeps sinking while Microsoft's AI business keeps soaring

Microsoft’s Q4/FY26 results were powered by cloud and AI, with Azure surpassing $100 billion in revenue.

Xbox had another weak quarter, with hardware revenue down 13% and content and services down 10%.

New Xbox chief Asha Sharma is reshaping the strategy with higher console prices, more releases on rival platforms, and a bigger push on core franchises.

The turnaround comes amid layoffs and studio closures, fueling criticism and raising questions about Xbox’s long-term profitability.