Xbox holds up in a historic quarter for Microsoft, but gaming revenue drops

The Xbox business falls in services and content as Microsoft signs one of its best quarters.

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Microsoft has presented its financial results for the second quarter of fiscal year 2026, and although the company is experiencing one of the strongest economic moments in its history thanks to the cloud and artificial intelligence, the Xbox area has not followed the same growth rhythm.

During the period closed on December 31, 2025, Microsoft recorded $81.3 billion in revenue, a 17% increase year-over-year, with a net profit that grew by a significant 60%. However, within the More Personal Computing division, where Xbox is integrated, the data shows a more moderate reading.

Xbox reduces revenue in content and services despite Microsoft’s global strength

According to official data, Xbox content and services revenue fell by 5% compared to the same quarter of the previous year (-6% at constant exchange rates). This is a significant decline, especially in a context where Game Pass, Xbox Cloud Gaming, and digital services are the central axis of the brand’s strategy.

The report does not provide specific figures for subscribers or individual Game Pass performance, but it does confirm that the gaming area has not accompanied the explosive growth of the cloud, which has been the main driver of the quarter. In contrast, Azure grew by 39%, and Microsoft Cloud revenue exceeded $51.5 billion in a single quarter for the first time.

On the positive side, Windows OEM and devices grew by 1%, suggesting some stability in hardware, although without clear signs of acceleration in console sales.

Xbox remains strategic, but is going through an adjustment phase within a Microsoft that is increasingly focused on AI, cloud services, and cross-platform ecosystems. The next quarters will be key to measuring the impact of first-party releases, the evolution of Game Pass, and the real weight of cloud gaming within the company’s global business model.