Xbox Reset Triggers Microsoft’s Worst Month Since 2000

Microsoft’s stock plunged about 20% in June 2026, the worst month since December 2000, driving its market cap down to around $2.75 trillion as investors fret that heavy AI infrastructure spending is squeezing free cash flow. At the same time, Xbox is undergoing a major reset led by CEO Asha Sharma that could include layoffs, studio closures, and game cancellations, with CFO Amy Hood pushing cost savings as Microsoft’s fiscal year ends on June 30. Xbox margins are only about 3%, raising ROI concerns, and there’s chatter about potentially spinning out Xbox, though it remains unclear if any changes will meaningfully move Microsoft’s stock.