Microsoft raised prices on all its Xbox gear Thursday morning, right as its stock surged 10% to $435.91, pushing it to the very top of the global market cap list.
The company dropped the price bomb just hours after it reported better-than-expected results for the third quarter and bragged about strong sales from its Azure cloud division.
The financial update and new guidance sent other tech names higher too. Meta by jumped 5%, and Nvidia rose by 4%, according to data from Bloomberg.
The company announced that its holiday pricing on first-party Xbox games will now jump from $70 to $80. Console prices are getting hit too. The Series S 512GB will now go for $380, up $80. The more powerful Series X is getting hiked by $100, landing at $600. Controllers and headsets are also going up. All of it takes effect immediately at retail stores. No discount, no buffer—just pay up or log off.
Microsoft blames tariffs and dev costs as Xbox prices rise
Microsoft did not confirm if these hikes are directly caused by tariffs, but the company didn’t deny the pressure either. Xbox, in a blog post, said, “We understand that these changes are challenging, and they were made with careful consideration given market conditions and the rising cost of development.” That post hit the internet early Thursday, right after the earnings call.
The company has long relied on overseas factories, including ones in China, to manufacture Xbox consoles and other hardware. During the earnings call on Wednesday, Microsoft said that ongoing trade war tensions have left PC makers sitting on more inventory than usual. That buildup was blamed on fears over tariffs.
Amy Hood, the company’s finance boss, pointed to the Windows OEM and device business, which includes licenses for Windows sold to PC manufacturers. She said, “Windows OEM and devices revenue increased 3% year over year, ahead of expectations, as tariff uncertainty through the quarter resulted in inventory levels that remained elevated.”
Even though Microsoft builds and sells physical products like Surface laptops and Xbox consoles, it’s not as exposed to those risks as companies that rely entirely on hardware. Still, the ripple effect is obvious. The company is paying more for parts sourced from outside the U.S., and it’s also seeing customers cut back on software as their own budgets tighten.
Microsoft pours cash into AI chips and cloud software
While it’s charging gamers more for consoles and games, Microsoft is dropping massive amounts of money into AI and cloud infrastructure. The company confirmed it’s buying Nvidia GPUs and setting them up worldwide to support ChatGPT and other artificial intelligence tools being built by OpenAI.
CEO Satya Nadella said on the call, “I think if you sort of buy into the argument that software is the most malleable resource, we have to fight any type of inflationary pressure or any type of growth pressure where you need to do more with less, I think we can be super helpful in that.” He made it clear that the plan is to keep helping clients stretch their spending while growing Microsoft’s share of that market.
The company has already turned those AI bets into actual products. Developers using GitHub Copilot are getting real-time code suggestions. Office workers are now using Microsoft 365 Copilot, which answers questions in Excel, Teams, and other apps. These tools are already being packaged with enterprise services and sold across industries, from finance to logistics.
None of this has anything to do with Xbox, but it’s where the money’s going. Hardware’s getting more expensive. Cloud and AI? That’s where Microsoft is leaning. The trade war and inflation are just part of the backdrop.
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