In Microsoft's fourth-quarter financial results for 2026, Xbox content and services revenue fell by 10%, and hardware revenue declined by 13%, capping off a full year of uninterrupted declines, while Microsoft's overall profits jumped by 31%. Xbox's 13% YoY hardware drop is not as bad as last quarter's 33% plummet, but the situation is expected to worsen when Xbox Series S|X consoles become at least $100 more expensive starting in August. Xbox content and services revenue fell by 10% YoY this quarter, compared with a 5% decline last quarter. New Xbox CEO Asha Sharma, who replaced Phil Spencer in February, has begun implementing a radical course correction, including partially reversing the policy of releasing in-house titles on rival platforms to boost hardware sales and confirming a renewed push for major franchises such as Fallout and The Elder Scrolls. However, rolling layoffs affecting 3,200 positions this year and the loss of five game studios have drawn sharp criticism. Microsoft CEO Satya Nadella expressed hope for Xbox to return to profitability in fiscal year 2027. Meanwhile, Microsoft's overall revenue increased 18% YoY, and profits rose 31%, mostly due to cloud and AI services, with Azure revenue exceeding $100 billion for the first time this year.