Gaming stocks, morning of October 29: Microsoft rises after earnings as Xbox revenue falls

Microsoft shares rose in extended trading Wednesday after the company reported better-than-expected quarterly results led by its cloud business. Gaming told a different story: Xbox content and services revenue fell from a year earlier.

Cloud growth leads the share gain

Microsoft shares (MSFT, Nasdaq) rose 4% in extended trading Wednesday, according to CNBC. The company beat analysts’ revenue and earnings-per-share estimates as Azure cloud revenue grew 48% year on year. Cloud helped drive the overall results, so the share gain does not reflect Xbox alone.

According to Microsoft’s earnings release, company-wide revenue reached $92.3 billion in the quarter ended September 30, up 19% from a year earlier. Operating income rose 21% to $45.9 billion.

Xbox content and services revenue falls

Xbox content and services revenue fell 2% year on year in the same quarter. According to Shacknews, lower Xbox Game Pass and third-party content revenue drove the decline, partly offset by growth in Microsoft’s own content. Xbox hardware revenue fell 14% from a year earlier.

Microsoft includes Xbox in its Devices and Consumer segment alongside search and advertising, devices, and Windows licenses sold to PC manufacturers. Revenue for the whole segment fell 3% to about $15.5 billion; that decline covers the entire segment, not Xbox alone.

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