Microsoft says it expects revenue from its Surface hardware and Windows business to decline as rising memory prices continue to strain the global PC market. Chief financial officer Amy Hood told analysts that the company’s More Personal Computing segment is projected to generate between $12.3 billion and $12.8 billion in the coming quarter, down from $14.3 billion previously reported. Windows OEM and device revenue is expected to drop in the low-teens percentage range.
Hood cited higher memory costs as a key factor, noting that uncertainty in RAM pricing is widening the range of potential market outcomes. The company also said the surge in PC purchases tied to the transition away from Windows 10 has ended, with manufacturers now working through excess inventory. As a result, overall Windows revenue is expected to fall by about 10 percent.
Investor concerns intensified a day later when Microsoft’s stock dropped roughly 12 percent. Much of the anxiety centered on Azure’s heavy capital spending and its growing dependence on AI infrastructure. Hood said Microsoft spent $37.5 billion on capital expenditures during the quarter, with nearly two-thirds directed toward GPUs and CPUs for its server and cloud business, adding that customer demand continues to exceed supply.
Despite the challenges, Microsoft reported strong financial results, posting net income of $38.5 billion on revenue of $81.3 billion for the quarter, representing a significant year-over-year increase.
