Things are not good right now for tech giant Microsoft (MSFT) on the gaming front. It has been systematically losing ground to chief rival Sony (SONY) for the last few years now. Throw in layoffs and price hikes at Microsoft and some might actually think Microsoft is trying to depart the gaming market altogether. But new reports suggest a greater plan could be in the making, and this was good enough for investors. Microsoft shares ticked up fractionally in Monday afternoon’s trading.
Claim 50% Off TipRanks Premium and Invest with Confidence
- Unlock hedge-fund level data and powerful investing tools designed to help you make smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis so your portfolio is always positioned for maximum potential
Microsoft’s numbers of late have not been good news. Microsoft reportedly sold 1.7 million Xbox Series S and Series X units in 2025. This is good enough objectively, but subjectively, it collapses. The original Nintendo Switch sold 3.4 million units this year, roughly double Microsoft’s sales. Worse, the original Switch was originally released in 2017.
This makes it clear that the original model of walled gardens is not working particularly well for Microsoft, and also suggests why Microsoft seems to be considering an active pivot away from the pure-console market into a console that can handle PC games as well. The only downside to that strategy is that Steam looks to be doing the exact same thing, and may beat Microsoft to the punch by years. So Microsoft’s future in gaming is changing, focusing on cloud gaming and cross-platform operations. But will this be enough to pull Microsoft gaming out of its slump?
Senior Management Stay Out
Meanwhile, in AI development, CEO Satya Nadella is reportedly bringing out a new meeting strategy, one that snubs senior executives in favor of a focus on the developer, giving “lower-level technical employees working directly on AI projects” immediate access to Nadella himself.
The meeting style is coupled with a new Teams channel, both of which work together to speed up development in AI while also giving Nadella access to “unfiltered insights.” This strategy is described as “messy and chaotic,” but by design, which ensures Nadella is getting word directly from the people who actually do the work, as opposed to the people whose jobs depend on the people doing the work. This actually lines up with earlier reports about Nadella calling on senior leadership to get on board with new developments or leave the company.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 32 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 10.85% rally in its share price over the past year, the average MSFT price target of $631.36 per share implies 29.98% upside potential.
