Microsoft’s Gaming Fueled By Activision Blizzard Despite Xbox Sales Dip

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Key Takeaways

  • Microsoft's fiscal Q3 2024 earnings increased to $61.9 billion, bolstered by the Activision Blizzard acquisition.
  • The gaming division saw a 31% decrease in Xbox hardware sales.
  • Microsoft Cloud thrived with a 23% increase in revenue.

Microsoft’s earnings surged, driven by the Activision Blizzard acquisition and cloud services. The company faced a 31% drop in Xbox hardware sales despite this.

Microsoft recently reported its fiscal Q3 2024 results, showing revenue of $61.9 billion and net income of $21.9 billion. These are increases of 17% and 20%, respectively.

This growth reflects continued earnings from its recent Activision Blizzard acquisition, briefly making gaming Microsoft’s third-largest segment.

This quarter, Microsoft experienced a resurgence in its Windows OEM revenue, which grew 11% year-over-year against expectations of stability. This increase is attributed to licensing fees from PC manufacturers, and the company plans to further boost this revenue stream with the launch of AI PCs featuring Qualcomm’s Snapdragon chips.

Xbox Having Hard Times

Despite strong overall performance, Microsoft’s gaming sector saw mixed results. While Activision Blizzard’s addition significantly boosted gaming revenues, Xbox hardware sales plummeted by 31%, heavily influenced by lower console sales.

Microsoft’s CFO Amy Hood anticipates a similar downturn next quarter but remains optimistic about potential gains from Xbox content and services, which are expected to increase due to Activision Blizzard’s influence.

Microsoft Cloud Success

Microsoft’s cloud sector continues to excel, with Microsoft Cloud generating $35.1 billion, up 23%, driven partly by Azure and its AI services.

Office products and cloud services also saw growth, with a 13% increase in commercial products and cloud services revenue.

Security remains a priority for Microsoft, with CEO Satya Nadella emphasizing its importance over all other investments.