Microsoft Corporation (MSFT) reported a 9% decline in gaming revenues year-over-year for the second quarter of fiscal 2026, attributed to weaker performance in first-party content. The March 2026 Xbox Partner Preview unveiled 19 new games, 14 of which will debut on Game Pass, including Hades II and S.T.A.L.K.E.R. 2: Heart of Chornobyl DLC, aiming to strengthen subscriber engagement. Despite a decline in revenues, record engagement metrics were reported with significant increases in PC players and streaming hours.
For the upcoming fiscal third quarter, Microsoft anticipates mid-single-digit declines in Xbox content and services revenues, impacted by a tough prior-year comparison but partially offset by Game Pass growth. Concurrently, competitors Sony and Nintendo are expanding their own game libraries; Sony refreshed its PlayStation Plus catalog and Nintendo is focusing on first-party titles for its Switch 2.
Over the past six months, MSFT shares have decreased by 31.4%, outperforming the Zacks Computer – Software industry’s decline of 34.8%. The Zacks Consensus Estimate for MSFT’s fiscal 2026 earnings stands at $17.10 per share, indicating an expected growth of 25.37% year-over-year.
