Microsoft may consider selling Xbox after 2026 US midterms, analyst says
Microsoft could consider selling its Xbox gaming division following the 2026 US midterm elections that returned Democrats to control of both the House and Senate, industry analyst Joost van Dreunen wrote in a Substack post after the vote.
Van Dreunen argued that Democratic control of Congress increases the likelihood of an Xbox divestiture because of potential political pressure on Microsoft’s AI and data centre ambitions. The Substack post included the line, "Top of the Democratic agenda on day 1 needs to be a pause on advanced AI development, regulation of this out of control industry, and a ban on artificial superintelligence." He suggested resistance to new data centres in US communities could complicate Microsoft’s infrastructure expansion.
The report noted Xbox generated approximately $5.4 billion in revenue in the previous quarter of 2026, a slight year-over-year decline, while Microsoft’s Search and Advertising division showed stronger growth over the same period. Those relative performances were cited as contributing to Microsoft’s increased emphasis on cloud services and AI-powered businesses.
Microsoft has implemented major restructuring within Xbox, cutting thousands of jobs as part of a broader strategy, the report said. The company has also pursued new projects including Xbox XP, which explores expanding gaming franchises into movies and TV shows, and Xbox Labs, described as an AI-powered research arm for next-generation game development.
The suggestion that Xbox could be sold remains speculative and has not been confirmed by Microsoft. "No. Microsoft has not announced any plans to sell," the report emphasised, adding that the claim comes from gaming industry analyst Joost van Dreunen and remains speculation; Asha Sharma has publicly stated that the gaming division is not for sale.
The discussion in the Substack post is based on the analyst’s view rather than an official Microsoft statement; while the gaming division continues to be central to the company's entertainment ventures, the report raises questions about how shifting investment priorities toward AI and data centres might affect the future of the gaming business.