Microsoft Stock Rises After Company Shoots Down Xbox Exit Rumors

This article first appeared on GuruFocus.

Microsoft (MSFT, Financials) shares ticked higher Monday after the company stepped in to squash growing rumors that it was done making Xbox consoles.

Speculation had been swirling online that the Xbox Series X and S would be the last of their kind, with Microsoft supposedly shifting to a cloud-only future centered on Xbox Game Pass. But the company made it clear that’s not the plan.

In a statement to Windows Central, Microsoft said, We are actively investing in our future first-party consoles and devices designed, engineered and built by Xbox. The tech giant also pointed to its ongoing partnership with Advanced Micro Devices (AMD), which is working on new hardware for the next generation of Xbox devices.

That reassurance was enough to nudge Microsoft’s stock up about 1% for the day, adding to its nearly 25% year-to-date rally. Most of those gains have been driven by Microsoft’s booming AI business, but the update gave gaming investors something to cheer about too.

The rumor made waves partly because Xbox hardware sales have been under pressure this generation. Microsoft has leaned more into cloud gaming and cross-platform releases, making several first-party titles available on PlayStation and Nintendo consoles a big shift from its traditional console strategy.

Still, Monday’s response showed Microsoft isn’t walking away from hardware anytime soon. With a new wave of AMD-powered devices already in the works, the Xbox brand appears to be sticking around for the long haul.

Wall Street remains confident in Microsoft’s broader outlook. Analysts have a Strong Buy consensus, with an average price target of $628 about 20% higher than where the stock trades today.