Microsoft Corp (NASDAQ:MSFT) has raised Xbox, saying soaring memory costs fueled by the AI boom are making gaming hardware significantly more expensive.
Microsoft Cites AI-Driven Memory Crunch Behind Latest Xbox Price Hike
On Thursday, Microsoft announced that Xbox Series X and Series S consoles will become more expensive starting Aug. 1.
In a blog post, the company said it had worked with suppliers for months in an effort to avoid another increase but ultimately couldn’t absorb higher component costs.
“Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027,” Microsoft said.
Alongside the Xbox price hike, Microsoft unveiled buy now, pay later and zero-interest financing options, describing the programs as a way to make Xbox consoles “more accessible” despite rising prices.
The updated pricing puts the Xbox Series S 512GB at $500, the 1TB model at $600, the Xbox Series X 1TB Digital Edition at $750 and the 1TB disc-drive version at $800, as per CNET. Microsoft also said it will discontinue the 2TB Xbox Series X.
AI Infrastructure Is Reshaping Consumer Electronics Pricing
The company attributed the latest increase primarily to soaring storage and memory costs, which have been driven higher by unprecedented demand for AI infrastructure.
As technology companies continue investing billions of dollars in AI data centers, memory manufacturers have shifted production toward high-margin chips used in AI servers, tightening supplies for consumer electronics.
The result has been higher prices for key components used in gaming consoles, PCs and other devices.
Apple, Sony, Nintendo And Valve Face Similar Cost Pressures
Microsoft is not alone in passing higher costs on to consumers.
Sony Group (NYSE:SONY) has raised PlayStation 5 prices multiple times, while Nintendo Co (OTC:NTDOY) is set to increase Switch 2 prices after previously raising prices for the original Switch.
Apple Inc. (NASDAQ:AAPL) joined the trend on Thursday by raising prices on select MacBooks and iPads after CEO Tim Cook said higher memory and storage costs had become unavoidable.
Price Action: Microsoft shares closed Thursday down 3.46% at $352.83 and rose 0.74% to $355.44 in after-hours trading, according to Benzinga Pro.
According to Benzinga Edge Rankings, Microsoft stock scores in the 93rd percentile for Quality, though its stock has posted negative returns over the short, medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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