Technology
Microsoft’s AI business is booming — Xbox, not so much
Microsoft’s cloud and AI businesses are doing pretty well — and their impact is being felt across the company. In its Q2 2025 earnings, Microsoft announced revenue of $69.6 billion for the quarter, up 12 percent year-over-year, and net income of $24.1 billion, which is up 10 percent year-over-year.
As for the AI business, CEO Satya Nadella says in a statement that it has “surpassed an annual revenue run rate of $13 billion, up 175 percent year-over-year.” The company’s Azure and other cloud services business grew 31 percent year-over-year, a slight decrease from 33 percent YoY growth the previous quarter.
The company’s gaming revenues didn’t fare so well. Gaming revenue declined 7 percent, and Xbox hardware revenue declined 29 percent. Microsoft has been moving away from a focus on its own hardware with messaging like its “This is an Xbox” ad campaign and bringing Xbox Game Studios games to other platforms, and those changes could be contributing to the decline.
That means the focus is instead on games and services, and that’s where the business is seeing some improvements. Xbox content and services revenue were up 2 percent, “driven by growth in Xbox Game Pass,” Microsoft says. (Last quarter, Microsoft’s software gaming revenues were way up even as Xbox hardware revenue declined.)
Microsoft also said that it saw Windows OEM and Devices revenue growth of 4 percent year-over-year, a slight bump from 2 percent in Q1.
Relativity Space, the rocket company led by former Google executive Eric Schmidt, was picked to launch NASA’s Aeolus payload to Mars in 2028, as reported earlier by TechCrunch. Under a new public-private partnership, Relativity Space will provide the “spacecraft, rocket, and cruise operations” to fly Aeolus to Mars, where the payload will “provide the first integrated, daily, global view of Martian winds, temperatures, dust, and clouds.”
The Aeolus payload will have four instruments on board for studying the Martian atmosphere, which NASA says will “directly inform entry, descent, and landing systems and support safer, more predictable mission planning for astronauts.”
Schmidt, who served as CEO of Google from 2001 to 2011, became Relativity Space’s CEO in 2025, a couple of years after it launched the “world’s first 3D-printed rocket,” Terran 1, which failed shortly after launch. Relativity Space’s larger Terran R rocket isn’t scheduled to have its first launch until later this year.
Jeff Bezos, founder and executive chairman of Amazon and owner of the Washington Post, looks out into crowd during the New York Times annual DealBook summit at Jazz at Lincoln Center on December 04, 2024, in New York City. (Michael M. Santiago/Getty Images)
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Welcome to Fox News’ Artificial Intelligence newsletter with the latest AI technology advancements.
IN TODAY’S NEWSLETTER:
– Jeff Bezos predicts AI will create a labor shortage, not replace human workers across the economy
– OpenAI faces multistate investigation into data handling and chatbot behavior
– AI-designed ‘universal vaccine’ passes first human clinical trial, could prevent future pandemics
WORK IN PROGRESS: Amazon founder Jeff Bezos said the rise of artificial intelligence (AI) won’t lead to the replacement of humans in the workforce and will instead create labor shortages.
Sam Altman, chief executive officer of OpenAI, during a panel session on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, January 18, 2024. (Stefan Wermuth/Bloomberg via Getty Images / Getty Images)
UNDER SCRUTINY: OpenAI faces a multistate investigation led by New York Attorney General Letitia James, scrutinizing its data handling, minor safety and chatbot behavior. This comes as the company reportedly slashes product prices and prepares for a potential IPO, amid accusations from Florida’s AG regarding unsafe product releases.
FUTURE-PROOFED: A vaccine created using artificial intelligence that could potentially provide broader protection against multiple coronaviruses and help prepare for future outbreaks has passed its first human clinical trial.
POWER STRUGGLE: As data center projects continue to get shut down across the country, “Shark Tank” star Kevin O’Leary and other investors are warning that the facilities are needed to compete with China in the artificial intelligence race.
TABLES TURNED: As artificial intelligence (AI) companies race toward IPOs and scramble to construct data centers, a new Fox News Poll finds voters now view Big Tech — not Big Government — as the greater threat to the nation’s future, a striking turnaround from seven years ago.
PERSONAL SHOPPER: Amazon Alexa and Echo VP Daniel Rausch discusses the extensive A.I. overhaul of Alexa, now dubbed Alexa+. He explains new capabilities like personalized shopping assistance for Prime Day and more. Rausch emphasizes the vision to make customers’ lives easier, announcing global expansion into over 10 additional countries, including Brazil, while supporting devices up to eight years old.
Amazon says Alexa.com allows conversations to carry over across devices, giving users continuity between laptops, phones and smart home screens. (Photographer: Michael Nagle/Bloomberg via Getty Images)
AUTOPILOT WARFARE: We are watching a fundamental restructuring of how military power works, and most of the institutions responsible for governing it are still thinking in the previous century. And this is all due to how AI is rapidly changing warfare.
RESTORING INDEPENDENCE: In honor of America’s 250th birthday, Meta is donating Ray-Ban Meta AI glasses to every legally blind veteran. Army veteran Don Overton, who served in the 82nd Airborne, describes how the glasses have restored his independence and dignity. Meta President Dina Powell McCormick highlights Don’s collaboration with Meta to optimize features for blind veterans.
Meta Platforms CEO Mark Zuckerberg sported a pair of Meta Ray-Ban Display AI glasses while speaking at the Meta Connect event in Menlo Park, California, on Wednesday, Sept. 17, 2025. As part of its push to make smart glasses a mainstream device, the company introduced its first model featuring an integrated display. (David Paul Morris/Bloomberg via Getty Images)
SILICON SHIELD: The Senate Banking Committee convened a hearing June 11 around a question that cuts to the core of American competitiveness and the American Dream: Can the United States ensure that rapid advances in artificial intelligence support “innovation, affordability, and American dominance?
CYBERCRIME BUST: The FBI, Google and Black Lotus Labs helped disrupt a massive China-based phishing-as-a-service operation known as Outsider Enterprise. Authorities say the operation powered fake websites built to steal credit card numbers, passwords and other personal information.
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Five months after returning to OpenAI, Barret Zoph — the company’s head of enterprise AI sales — has departed, The Verge has learned.
Zoph returned to OpenAI in mid-January after a stint as co-founder and CTO of Thinking Machines Lab, the competing AI company founded by former OpenAI CTO Mira Murati. Shortly after Zoph returned to OpenAI, the company said he would lead its push into enterprise — a significant role at OpenAI, since in recent months it had vowed to stop chasing so-called “side quests” and focus on key revenue drivers like enterprise and coding ahead of its planned IPO.
OpenAI confirmed to The Verge that Zoph will be departing. He posted a goodbye message in the company’s Slack channels. Zoph did not immediately respond to a request for comment.
Zoph originally left OpenAI in the fall of 2024 for Murati’s Thinking Machines Lab, but departed the role abruptly in January 2026 after reports of alleged misconduct involving an undisclosed relationship with a colleague. Murati posted on X in January that Thinking Machines Lab had “parted ways” with Zoph and that he would be replaced as CTO.
Thinking Machines Lab has its own tensions with OpenAI. Murati briefly took over as CEO from OpenAI CEO Sam Altman during his November 2023 ouster, and during the recent OpenAI trial, Murati testified that she couldn’t trust everything Altman said. In September 2024, when Murati left OpenAI to start Thinking Machines Lab, a group of OpenAI employees followed shortly after. But three of them — including Zoph — all returned to OpenAI together this past January. Fidji Simo, OpenAI’s CEO of Applications, wrote on X at the time that she was “excited to welcome Barret Zoph, Luke Metz, and Sam Schoenholz back” and that the decision had “been in the works for several weeks.”
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