Microsoft told analysts on its July 29 fiscal fourth-quarter earnings call that Windows OEM and devices revenue is expected to decline in the high teens for fiscal 2027, citing weaker PC market demand and rising component costs. The disclosure came alongside fiscal fourth-quarter revenue of $90 billion, up 18% year-over-year, and full fiscal-year revenue exceeding $331 billion.
Consumer PC market softens as component prices rise
CFO Amy Hood told analysts that More Personal Computing segment revenue, which includes Windows OEM licensing, fell 4% year-over-year to $12.9 billion in the quarter. Windows OEM and devices revenue specifically declined 7%, which Hood attributed to lower PC market demand, a difficult prior-year comparison tied to the Windows 10 end-of-support cycle, and rising component costs pushing up device prices. Hood also said OEM and channel partners continued building inventory in response to those rising component prices.
For fiscal 2027, Hood guided Windows OEM and devices revenue to decline in the high teens for the full year, and in the low 20s specifically for the first quarter, citing the same combination of component-driven price increases, the Windows 10 comparison, and elevated channel inventory.
Apple disclosed a similar pattern on its own earnings call this season: rising component costs are pushing new-device prices higher, and higher prices tend to stretch the time customers hold onto existing hardware. A softer new-PC market combined with rising component costs could extend the replacement cycle for Windows machines already in use. That pattern would favor repair shops and add to the pipeline of parts and refurbished units, though Microsoft did not comment on device longevity or the secondary market directly.
Focus on data center business
Microsoft CEO Satya Nadella told analysts the company added 31 new data centers during the quarter, bringing the total to 88 for the fiscal year, and added another gigawatt of capacity, with the company on track to roughly double its overall data center capacity within two years. Nadella also said Microsoft has cut “dock-to-live” deployment times for new GPUs in its largest regions by nearly 50% over the past fiscal year.
Hood told analysts that capital expenditures were $41 billion for the quarter, and that roughly two-thirds of that spending went to what she called short-lived assets, primarily CPUs and GPUs, as opposed to long-lived assets like buildings and land. Hood said Microsoft expects fiscal 2027 capital expenditures to grow year-over-year given demand across its portfolio, with first-quarter CapEx guided at over $50 billion.
Nadella also said Microsoft is modernizing its server fleet with its own custom silicon, including its Maia 200 AI chip, alongside hardware from NVIDIA and AMD, and will be among the first cloud providers to deploy next-generation rack-scale infrastructure built on AMD’s Helios platform and NVIDIA’s Vera Rubin platform.
Microsoft’s statements confirm that, like other hyperscalers, its data center fleet is expanding, GPU deployment is moving faster than before, and older chip generations are being displaced by newer ones. If that pace holds, more CPUs, GPUs, and server hardware will retire out of hyperscale data centers in the coming quarters, a volume ITAD and component recovery firms working in enterprise decommissioning should plan for now.
Two separate trends are worth tracking here. Slower PC sales and rising component costs favor longer device hold times, which should mean steadier work for repair shops and refurbishers rather than a surge in new retirements. Faster data center buildout and GPU turnover point the other way: more enterprise hardware cycling out of service as Microsoft and its competitors refresh their fleets, a volume opportunity for firms set up to handle data center decommissioning. Microsoft’s fiscal first-quarter results, covering July through September 2026, should show whether the component cost pressure Hood described continues to weigh on Windows OEM volume, and whether the data center hardware turnover Nadella described actually shows up as higher secondary-market volume in the following quarters.
