Microsoft’s Value Plunges $321 Billion, Following DeepSeek Reveal & Falling Data Centre Revenues
The value of Microsoft has plunged A$321bn in market value over the weekend, with the Companies new Copilot offering now coming under pressure from new Chinese AI offering DeepSeek.
The Company that recently dumped their diversity division and is desperately cuddling up to the Trump administration is under pressure in their cloud services business with the operation that houses the Companies Microsoft 365 offering delivering slower growth than Wall Street forecast.
The Company that has become obsessed with security with users of their 365 suites of tools having to re log in multiple times a day, and often twice when logging into the same app due in part to different elements of their so called ‘Integrated suite of tools”, being housed on different cloud servers.
The global software Company is also struggling to keep pace with demand for artificial intelligence-related services
While the Company beat analysts’ expectations for revenue and net income in the quarter ending in December, their cloud division — its biggest revenue driver, which includes its Azure cloud computing platform failed to deliver and this was critical as this division is seen as the ‘cash cow’ claim analysts.
Chief financial officer Amy Hood said Microsoft expected the “ongoing impact” of capacity constraints to persist in 2025 as the company worked to “address execution challenges”. She said this would lift by the end of the fiscal year.
Last week Microsoft launched their new Surface Pro and Surface notebooks for businesses were launched. This new offering was pitched as being the latest additions to the company’s Copilot+ PC lineup with no announcement made to Australian media.
Struggling in the notebook market, Microsoft is currently trying to market Surface with Copilot to Australian businesses claiming that their cloud compute scalability delivers the efficiency needed for local companies.
The Microsoft Surface Pro and Surface Laptop are powered by Intel Core Ultra Series 2 processors with Copilot+ PC capabilities which are said to enhance workflows.
In their most recently reported fiscal quarter ending December 2024 (2025 Q2), Microsoft generated approximately US$6.58 billion from gaming after forking out billions to acquire Activision and Blizzard. .
Despite these acquisitions the US Companies FY25 Q2 results revealed a 7% revenue decline for its gaming division
Xbox hardware also saw a 29% revenue fall.
Meanwhile, Xbox’s content and services revenue increased 2% which was attributed to the growth of Xbox Game Pass.
Nadel said “We’re focused on improving the profitability of the business in order to position it for long-term growth driven by higher margin content and platform services, and we are delivering on this plan.”
“We also continued to see strong momentum for Xbox Cloud Gaming, with a record 140 million hours streamed this quarter,” Nadella added.
“All up, Game Pass set a new quarterly record for revenue and grew its PC subscriber base by over 30% as we focus on driving fully paid subscribers”.
It was also mentioned that Call of Duty: Black Ops 6 proved to be a success due to its record-breaking launch month and that Indiana Jones and the Great Circle has “already been played by more than four million people” since its launch on December 9 for Xbox Series X, Xbox Series S, and PC.
Nadella said one of the lessons from the transition to cloud computing — when companies outsource their computer processing to external servers — was that as the cost of resources fell, demand climbed. “Optimisation means it will be much more ubiquitous,” he added.
According to the UK Financial Times the software giant has been one of the main beneficiaries of the AI boom, with surging demand for its cloud services and enthusiasm about its US$13bn partnership with OpenAI propelling it into a tiny club of companies with market values exceeding $3tn.
OpenAI’s models underpin Microsoft’s Copilot chatbot and its large language model is available to customers via Azure.
Last week, the group said it would change the structure of its deal with OpenAI to enable the start-up to use rivals’ cloud computing services. But it reserved the right of first refusal.
The move came as the start-up laid out plans with cloud provider Oracle and Japan’s SoftBank to build at least $100bn of AI infrastructure in the US as part of a project dubbed Stargate. Microsoft is only named as a technical partner for the project.