Microsoft(US:MSFT) 3 6 Ke·2026-01-26 13:07Core Viewpoint - The rising prices of storage chips are significantly impacting the consumer electronics industry, leading to product delays and cancellations, while simultaneously creating opportunities for cloud gaming as an alternative to traditional hardware [1][3][14]. Group 1: Impact of Storage Chip Price Surge - The price of storage chips has surged, causing a ripple effect across consumer electronics, with some smartphone manufacturers postponing new releases due to increased memory costs [1][3]. - In Q4 2025, the storage spot market experienced a price surge, with DRAM and NAND price indices rising over 150% in a single quarter, and annual increases reaching 386% and 207% respectively [3]. Group 2: Shift to Cloud Gaming - The price increases in hardware have led to a decline in consumer enthusiasm for upgrading devices, creating a favorable environment for cloud gaming, which allows users to play games without the need for expensive hardware [3][7]. - Microsoft is reportedly introducing an "advertising scheme" for Xbox cloud gaming, enabling users who have purchased digital games but do not subscribe to Xbox Game Pass to access cloud gaming for free by watching ads [5][7]. Group 3: Microsoft’s Xbox Performance - In the first quarter of Microsoft's fiscal year 2026, Xbox hardware sales revenue plummeted by 29% year-over-year, attributed to two price hikes in 2025, with some models increasing by as much as $130 [5][9]. - Despite the decline in hardware sales, Microsoft is doubling down on cloud gaming, positioning it as a viable alternative during a period of hardware price inflation [7][14]. Group 4: Data Center Developments - Microsoft operates over 400 data centers globally, with significant investments in AI infrastructure, including $17.5 billion for AI facilities in India and $5.4 billion in Canada [9][11]. - The current state of AI infrastructure is characterized by structural oversupply, with many data centers underutilized, making cloud gaming an attractive option to leverage idle computing power [12][14].