Microsoft's Windows Revenue Slumps Amid Rising Component Costs
Microsoft's Windows OEM and devices revenue declined 7% year-over-year in its fiscal fourth quarter, driven by weaker PC market demand and rising component costs. CFO Amy Hood attributed the decline to lower PC market demand, a difficult prior-year comparison due to the Windows 10 end-of-support cycle, and rising component costs that pushed up device prices.
Hood also mentioned that OEM and channel partners continued building inventory in response to the rising component prices. For fiscal 2027, Hood guided Windows OEM and devices revenue to decline in the high teens for the full year, and in the low 20s specifically for the first quarter.
Microsoft's data center business is growing rapidly, with 31 new data centers added during the quarter, bringing the total to 88 for the fiscal year. CEO Satya Nadella said Microsoft has cut 'dock-to-live' deployment times for new GPUs in its largest regions by nearly 50% over the past fiscal year.
The company's statements confirm that its data center fleet is expanding and GPU turnover is increasing, which could lead to more CPUs, GPUs, and server hardware retiring from hyperscale data centers in the coming quarters. However, slower PC sales and rising component costs may favor longer device hold times, benefiting repair shops and refurbishers.