Microsoft’s (MSFT) latest Windows personal computers with artificial intelligence features have a major hitch – the chips inside these PC models are incompatible with many popular video games.
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The Problem with Microsoft’s New PCs
Earlier this year, Microsoft launched the Copilot+ PCs, equipped with advanced AI functions like creating AI-generated images and videos. Yet, these laptops differ from their predecessors in one critical aspect —they no longer run on the Intel (INTC) chips. Instead, these Copilot+ PCs are built on Qualcomm (QCOM) chips, which, in turn, rely on designs from U.K.-based Arm (ARM).
This shift in hardware architecture has led to complications as most PC games are designed to operate on Intel’s x86 chip architecture. This chip architecture has been a standard for personal computers for decades. Chip architecture refers to the instruction set architecture (ISA), which defines how a chip processes data and executes instructions.
As Microsoft has shifted to the Qualcomm-Arm chips, a software layer is needed to translate this x86 Intel architecture into a format compatible with Arm. However, this translation process is not foolproof and can result in bugs, glitches, or even complete game failures.
The Chip Problem Hampers Running of Games on PCs
The problem is more widespread than expected. A WSJ report cited research firm Omdia, which tested around 1,300 games on these PCs and found that only 50% of them ran smoothly on MSFT’s new PCs. This is particularly concerning for gamers, who are among the most demanding PC users and represent an estimated 15% of laptop users.
Microsoft’s Response to the Hitch
Microsoft admitted that some games, especially those with heavy graphics, might not work on Copilot+ PCs. The company advised gamers seeking high-performance gaming to consider PCs optimized for that purpose.
Anti-cheating Software Could be Another Reason for Incompatibility
A major source of these issues is the anti-cheating software embedded in some games, a crucial feature for popular titles like Fortnite and League of Legends. This is because even if a game itself can be translated to run on the Arm architecture, the anti-cheating software might not be compatible. Meanwhile, Qualcomm has stated that it is working with anti-cheating software developers to improve compatibility.
Is Microsoft a Buy, Sell, or Hold?
Analysts remain bullish about MSFT stock, with a Strong Buy consensus rating based on a unanimous 31 Buys. Over the past year, MSFT has increased by more than 20%, and the average MSFT price target of $504.91 implies an upside potential of 23.3% from current levels.
