Windows Weekly 969

Microsoft is burning through billions on AI, but Wall Street is finally demanding to see where the payoff is. The earnings announcement triggered a $357 billion valuation wipe-out, the largest in Microsoft’s history and the second-largest in history overall (Nvidia managed to lose $593 billion in value in the wake of DeepSeek in early 2025).

Windows

• Windows 11 has over one billion users - and, surprise, it got their faster than Windows 10 without any of the shenanigans
• Microsoft to address the quality issues in Windows 11 in 2026
• There is already evidence that Microsoft is trying to make Windows 11 suck less: Recent OneDrive changes that address a key ensh*ttification, and let’s not forget all those security advances
• What did Microsoft really promise? Not much
• Microsoft has new EVPs for Security and Quality
• Microsoft belatedly delivered the January Week D update last Thursday, a preview of this month’s Patch Tuesday
• Dev and Beta builds both deliver Mark Russinovich’s sysmon tool

Microsoft earnings deep dive

• Microsoft reported a net income of $38.5 billion on revenues of $81.3 billion in the quarter ending December 31. Those figures represent gains of 60 percent and 17 percent, respectively, year-over-year
• Earnings analysis: All eyes are on AI and no one is happy
• Microsoft spent $37.5 billion on AI infrastructure (capex) in the quarter, up 66 percent YOY, and it’s on track to spend $150+ billion in the fiscal year
• Every single question was about this and how it will ever recoup the costs
• There are now 15 million paid Microsoft 365 Copilot seats out of 450+ million Microsoft 365 seats
• OpenAI is Microsoft’s biggest Azure customer, but it’s unclear if there is any real money there because of accounting tricks
• Windows, Edge, and Bing all “gained share,” PC maker revenues were up just 1 percent, the Windows 10 upgrade cycle was mostly a bust (it’s likely that most of it was tied to RAM pricing fears, too)
• Xbox fell off a cliff with content and services revenues down 5 percent in a holiday quarter somehow and Xbox hardware revenue declined an astonishing 32 percent YOY
• Standalone Office 2025 suite was a surprise hit, Hood is curious if that continues
• Microsoft 365 “cost of business” up 10 percent YOY because of AI costs
• AMD revenues up 34 percent to $10.3 billion
• Apple delivers record revenues of $143.8 billion; iPhone made more revenues by itself than all of Microsoft

AI

• Microsoft is going to basically make an app store for content makers who wish to be paid for use by AI
• Anthropic advertises that Claude will be advertising-free, unlike ChatGPT
• The next Firefox will include the promised AI kill switch and Vivaldi “extends the middle fingerˮ to AI

Xbox and games

• AMD reveals next Xbox console in 2027
• We’re getting a solid collection of Xbox Game Pass titles for the beginning of February
• Battlefield 6 was the best-selling shooter of 2025 and EA made $1.9 billion in Q4
• Epic Games has big plans for its PC launcher/store
• Nintendo has now sold 17 million Switch 2s as OG Switch hits 155 million units

Tips and picks

• Tip of the week: Make OneDrive Folder Backup work for you
• App pick of the week: Bitwarden (TWiT sponsor)
• RunAs Radio this week: Getting Started using Purview with Erica Toelle
• Brown liquor pick of the week: Glendronach Ode to Dark

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Check out Paul's blog at thurrott.com

The Windows Weekly theme music is courtesy of Carl Franklin.

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Links

• Windows 11 Now Has Over One Billion Users
• Microsoft Pledges to Address “Pain Points” Reported by Windows 11 Users
• Making Windows 11 Suck Less in 2026 ⭐
• Microsoft Announces New Security and Engineering Quality Roles
• Microsoft Belatedly Delivers First Week D Update of 2026
• Microsoft Delivers Minor New Dev and Beta Builds to Insiders
• Microsoft Revenues Up 17 Percent to $81.3 Billion
• Microsoft Earnings Analysis: You Can’t Spell ROI With AI ⭐
• AMD Revenues Up 34 Percent to $10.3 Billion
• Apple Reports Record Revenues of $143.8 Billion
• Building Toward a Sustainable Content Economy for the Agentic Web
• Anthropic Advertises That Claude Will Remain Advertising-Free
• Mozilla Details its New Controls for Blocking AI Features in Firefox
• Microsoft’s Next-Gen Xbox May Launch in 2027, Says AMD
• What’s Next for Xbox? ⭐
• High on Life 2, Madden NFL 26, and More Are Coming to Game Pass
• Battlefield 6 Propels EA to $1.9 Billion in Revenues
• Epic Games Teases New Store Architecture and Community Spaces
• Nintendo Has Sold 155 Million Switch, 17 Million Switch 2 Consoles
• Making Windows 11 Suck Less in 2026 ⭐
• Hell Freezes Over, If Only Slightly ⭐
• Microsoft is Silently Reversing Some OneDrive Ensh*ttification in Windows 11
• Bitwarden Enhances Premium Plan, Doubles Price
• Getting Started using Purview with Erica Toelle
• Glendronach