Is Microsoft Selling Xbox? Analyst Predicts a Sale, but Microsoft Denies It

The claim, in short​

Joost van Dreunen is the founder of SuperData Research and a professor at NYU Stern. In a November 5 Substack post titled "The Election That Could Break Up Xbox," he argues that growing opposition to data center projects could complicate Microsoft's AI expansion plans. He says Democratic voters showed their displeasure with the growing number of data centers being built across the US. If AI infrastructure gets harder or costlier to build, his logic goes, other divisions might have to give something up. Xbox, with falling revenue, would be the obvious candidate.

Several outlets repeated the story, including Wccftech and eTeknix. Wccftech itself noted that the analyst's picture is intriguing but far from inevitable. This is an analyst's thesis. It is not a Microsoft announcement.

What Microsoft has said​

Microsoft has said, through a spokesperson cited in coverage of the analyst's post, that Xbox is not for sale. The clearest earlier statement came from Xbox CEO Asha Sharma in a New York Times interview. According to Video Games Chronicle, she said "Xbox is not for sale." She added that Microsoft would look at the right partnerships and operating model.

That wording leaves room. "Not for sale" is a firm denial, but "everything needed" is broad. A denial is also not a promise that nothing will ever change. Still, no source in this story shows that Microsoft has started a sale process.

The election evidence​

The political backdrop is real, but its link to Microsoft's costs is the weakest part of the argument.

• Van Dreunen cites a Wall Street Journal report. According to that report, voters in more than 40 towns and counties considered data-center ballot measures, and at least 10 approved restrictions or bans.
• The Associated Press reported broader context. It said Democrats won governorships in several data-center hot spots, including Texas, Ohio and Georgia. It also reported that Redbud Consulting tracked dozens of local referendums, with restrictions approved in nearly all completed counts. The AP also noted that data-center regulation was not on most ballots and was not a top issue for most voters.
• None of this shows that a specific Microsoft project has been blocked, delayed or made more expensive. The data covers local opposition and a tougher policy climate. It does not measure what that climate costs Microsoft.

The financial picture​

Microsoft's fiscal 2026 annual report supports part of the analyst's framing. For the year ended June 30, 2026:

Microsoft said Xbox content-and-services revenue fell 5% and hardware revenue fell 29%. Total Xbox revenue fell $1.7 billion, or 7%. Search advertising grew.

These are revenue figures, not profit figures. Microsoft reports Xbox and search together inside More Personal Computing. So "Xbox profits are declining" cannot be read from those revenue lines alone. Microsoft's own filing does show that operating expenses in that area rose because of "impairment and other related expenses in our XBOX business." That fits a division under strain.

The same report weakens the idea that Microsoft is short of cash. It says fiscal 2026 revenue was $331.8 billion, up 18%, and operating income was $155.2 billion, up 21%. Microsoft Cloud revenue reached $214.4 billion, up 27%. Azure grew 41% and passed $100 billion for the first time. The cost side is visible too: Microsoft Cloud gross margin percentage fell to 66%, driven by AI infrastructure investment and growing AI product usage.

So AI is expensive, and Xbox is shrinking. But Microsoft is growing strongly overall. Nothing in the filing says the company needs to divest to fund AI.

Where XP fits​

Van Dreunen points to XP as supporting evidence. XP is the division announced on October 8 to take Xbox franchises into film, television, consumer products, partnerships and live experiences. He argues it makes Xbox look more like a traditional entertainment company, and therefore a more attractive target for buyers.

Xbox describes XP differently. In the announcement from Chief Strategy Officer Matthew Ball, the stated ambition is to be the world's top entertainment company. XP is led by president Kayleen Walters. It formalizes four areas: Xbox Pictures, Xbox Products, Xbox Places and Xbox Partnerships. Xbox says it brings together capabilities that already existed across teams. The announcement says nothing about a sale or about buyers.

The "make it sellable" reading is the analyst's inference. A franchise-licensing push is also a standard play for a company trying to grow a business. The two readings aren't mutually exclusive, but only one is Xbox's stated purpose.

Earlier reports on restructuring​

This isn't the first time a split has been floated. Video Games Chronicle reported that The Information said earlier this summer that Microsoft was considering spinning out or restructuring its gaming division as a wholly owned subsidiary, which in theory would make a future sale easier. That report was about corporate structure, not a decision to sell. Some outlets have also repeated a claim, attributed to The Information, about private equity buyers valuing Xbox at $100 billion to $150 billion. I couldn't verify that valuation figure from primary sources, so treat it with caution.

Van Dreunen has also written on Xbox's finances before. His July post "Unbundling Xbox" discussed layoffs, studio divestitures and cost structure under Sharma. That post is separate from the election thesis and doesn't prove it.

Counterpoints​

• Political causation is unproven. Local data-center votes don't automatically translate into higher Microsoft costs. Microsoft also frames its infrastructure work around community commitments, which suggests it expects to manage local friction.
• Selling Xbox wouldn't obviously fund AI. Xbox includes Activision Blizzard, which Microsoft bought for $75.4 billion in 2023. Unwinding that is a different matter from trimming a budget.
• Management signals point toward fixing, not exiting. Microsoft CEO Satya Nadella, as reported by VGC, praised Sharma's streamlining and said he feels fantastic about the studios and IP portfolio. He also said a sustainable business model is still needed.
• The analyst has been wrong before on specifics. In his July post he conceded he had guessed wrong about which assets Xbox would sell. He expected King to go, but King stayed and moved closer to Sharma.

What it means for Windows and Xbox users​

Nothing changes today. Xbox on PC, the Xbox app, Game Pass and the hardware roadmap are not affected by a theory. If a real change came, the likely sequence would be filings, reporting from major outlets and statements from Microsoft, not a Substack post. Watch for Microsoft's next earnings report, any change in how it reports Xbox results, and any formal corporate restructuring announcement.

For now, treat the headline as a forecast. The numbers confirm Xbox is shrinking while Microsoft grows. The sale is still only the analyst's scenario.