Microsoft’s (MSFT) presence in the gaming market may not be quite as big as its presence in cloud computing or other segments, but it’s still a major part of the bottom line nonetheless. And Microsoft stock is actually down fractionally in the closing minutes of Monday’s trading session after analysts made it pretty clear that such a move was about as vital as it was inevitable. We know that Microsoft recently hiked prices on its Game Pass operations. But Piers Harding-Rolls of Ampere Analysis spelled it out: the price of the inputs (making and marketing games) has risen, so the price to customers must also increase.
Other analysts, including Circana’s Mat Piscatella, agreed with this position. Piscatella pointed out that the subscription market has been flat for the last few years. With video game subscription service spending actually declining so far this year, it’s clear that Microsoft needs to make up the difference somewhere, and that means charging those who stick around more.
Cloud Concerns and a New Ornament
Meanwhile, a response to the notion that you no longer need an Xbox to play Xbox is coming in, and skepticism reigns. Digital Foundry declared that the idea was much better than its current execution and that significant improvement to infrastructure would be required in order to make it anything other than the most pie-in-the-sky of forecasts. It wasn’t all bad, however; apparently the introductory interface delivers useful content like changing your TV to Game Mode before playing.
And then, just to round it out, Hallmark rolled out a new Christmas ornament to get people ready for the upcoming holiday shopping season. It’s an original Xbox, complete with the classic giant controller, in a tree-hanging-worthy tiny scale. It’s also musical, playing the console’s startup sounds as well as music from the original “Halo” game.
Is Microsoft a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 33 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 32.33% rally in its share price over the past year, the average MSFT price target of $502.56 per share implies 10.8% upside potential.
