Microsoft said this week that it expects Surface and Windows revenue to fall as a result of the ongoing shortages of memory in the PC market.
Microsoft chief financial officer Amy Hood told analysts that revenue in its More Personal Computing segment, which includes the Surface devices, should fall to between $12.3 billion and $12.8 billion, from the $14.3 billion that the company reported during the quarter. Windows OEM and devices revenue should decline in the low teens, she said.
“The range of potential outcomes remains wider than normal, in part due to the potential impact on the PC market from increased memory pricing,” she said.
Microsoft also reported that the surge in PC buying due to transition away from Windows 10 has ended as PC makers sell through their inventory. Windows revenue should fall by 10 percent, Hood said. PC makers have already warned about rising prices, especially Dell and Lenovo. Microsoft did not say that it was raising PC prices, however — still, as we have noted, the continuing rise of RAM prices means the impact to PC consumers tends to remain a mystery.
A day later, however, and Microsoft’s stock had plunged by 12 percent in a single day, as investors apparently worried about Microsoft’s Azure revenue and dependence on OpenAI. “Capital expenditures were $37.5 billion, and this quarter, roughly two-thirds of our [expenditures] was on short-lived assets, primarily GPUs and CPUs” for the server business, Microsoft’s Hood said. “Our customer demand continues to exceed our supply.”
Overall, Microsoft reported net income of $38.5 billion, up 60 percent from a year ago, on revenue of $81.3 billion for its second fiscal quarter and the fourth calendar quarter of 2025.