Microsoft's Xbox Hardware Sales Plunge 70%, Future Focus on Cloud Gaming
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 21 2025
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Should l Buy MSFT?
Source: Newsfilter
- Sales Decline: Microsoft's Xbox hardware sales plummeted 70% year-over-year, struggling against strong performances from competitors Nintendo Switch and Sony PlayStation, indicating a challenging position in the gaming console market.
- Layoffs and Restructuring: Microsoft laid off 1,900 employees, about 9% of its gaming division, and shut down several studios, reflecting cost-cutting pressures in pursuit of a 30% profit margin target amid rising operational costs.
- Cloud Gaming Strategy: Microsoft aims to create an open system for its next-gen Xbox that allows players to switch seamlessly between console, PC, and cloud gaming, intending to broaden its user base and adapt to future market dynamics.
- Subscription Service Growth: Xbox Game Pass subscribers reached 34 million in 2024, with annual revenue nearing $5 billion, showcasing strong growth potential for cloud gaming services despite challenges from recent price hikes.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MSFT is 631.36 USD with a low forecast of 500.00 USD and a high forecast of 678.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 430.290
Low
500.00
Averages
631.36
High
678.00
Current: 430.290
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author

Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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