Microsoft is burning through billions on AI, but Wall Street is finally demanding to see where the payoff is. The earnings announcement triggered a $357 billion valuation wipe-out, the largest in Microsoft's history and the second-largest in history overall (Nvidia managed to lose $593 billion in value in the wake of DeepSeek in early 2025).

Windows

• Windows 11 has over one billion users - and, surprise, it got their faster than Windows 10 without any of the shenanigans
• Microsoft to address the quality issues in Windows 11 in 2026
• There is already evidence that Microsoft is trying to make Windows 11 suck less: Recent OneDrive changes that address a key ensh*ttification, and let's not forget all those security advances
• What did Microsoft really promise? Not much
• Microsoft has new EVPs for Security and Quality
• Microsoft belatedly delivered the January Week D update last Thursday, a preview of this month's Patch Tuesday
• Dev and Beta builds both deliver Mark Russinovich's sysmon tool

Microsoft earnings deep dive

• Microsoft reported a net income of $38.5 billion on revenues of $81.3 billion in the quarter ending December 31. Those figures represent gains of 60 percent and 17 percent, respectively, year-over-year
• Earnings analysis: All eyes are on AI and no one is happy
• Microsoft spent $37.5 billion on AI infrastructure (capex) in the quarter, up 66 percent YOY, and it's on track to spend $150+ billion in the fiscal year
• Every single question was about this and how it will ever recoup the costs
• There are now 15 million paid Microsoft 365 Copilot seats out of 450+ million Microsoft 365 seats
• OpenAI is Microsoft's biggest Azure customer, but it's unclear if there is any real money there because of accounting tricks
• Windows, Edge, and Bing all "gained share," PC maker revenues were up just 1 percent, the Windows 10 upgrade cycle was mostly a bust (it's likely that most of it was tied to RAM pricing fears, too)
• Xbox fell off a cliff with content and services revenues down 5 percent in a holiday quarter somehow and Xbox hardware revenue declined an astonishing 32 percent YOY
• Standalone Office 2025 suite was a surprise hit, Hood is curious if that continues
• Microsoft 365 "cost of business" up 10 percent YOY because of AI costs
• AMD revenues up 34 percent to $10.3 billion
• Apple delivers record revenues of $143.8 billion; iPhone made more revenues by itself than all of Microsoft

AI

• Microsoft is going to basically make an app store for content makers who wish to be paid for use by AI
• Anthropic advertises that Claude will be advertising-free, unlike ChatGPT
• The next Firefox will include the promised AI kill switch and Vivaldi "extends the middle fingerˮ to AI

Xbox and games

• AMD reveals next Xbox console in 2027
• We're getting a solid collection of Xbox Game Pass titles for the beginning of February
• Battlefield 6 was the best-selling shooter of 2025 and EA made $1.9 billion in Q4
• Epic Games has big plans for its PC launcher/store
• Nintendo has now sold 17 million Switch 2s as OG Switch hits 155 million units

Tips and picks

• Tip of the week: Make OneDrive Folder Backup work for you
• App pick of the week: Bitwarden (TWiT sponsor)
• RunAs Radio this week: Getting Started using Purview with Erica Toelle
• Brown liquor pick of the week: Glendronach Ode to

These show notes have been truncated due to length. For the full show notes, visit https://twit.tv/shows/windows-weekly/episodes/969

Hosts: Leo Laporte, Paul Thurrott, and Richard Campbell

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Microsoft's Patch Tuesday blunder triggers emergency fixes, surprise layoffs ripple through Amazon, and the crew debates whether rapid AI advances spell the end of traditional apps. Also, password managers do a lot more than manage passwords, so there's one thing everyone needs to get right.

Windows 11

• Dev splits from Beta, tests what will surely be 26H1 - After last week's show, Microsoft did issue that same Beta build in the Dev channel for some reason
• Dev and Beta get same fixes in different builds, but no new features
• 24H2 and 25H2 Release Preview update(s) are a peek at the next Patch Tuesday, lots of changes
• January Patch Tuesday update was so terrible it required two emergency fixes, the second of which went out late Sunday

Earnings/industry

• Intel falls flat in Q4, full year 2025 despite U.S. "investment"
• Amazon lays off 16,000 employees
• Microsoft, Apple, earnings this week, Alphabet, Amazon are next week

AI

• Microsoft announces Maia 200 AI datacenter processor
• Like Baldric in Black Adder, Apple has a cunning plan for an AI Siri
• With AI costs soaring, cheaper new AI plans appear somehow
• OpenAI was last week with big expansion of ChatGPT Go
• Google does the same this week with AI Plus plan
• OpenAI, Anthropic (this week), others are adding "apps" to their chatbots
• Microsoft is exposing app features as AI Actions in Windows 11
• Paul opined that this semantic/programmatic capability was the end of apps
• But we can now essentially vibe-code our own custom apps - this is vaguely reminiscent of the home computer/DIY era, but without the technical knowledge requirements
• The age of native apps is over, at least on desktop. Will mobile fall next?

Dev

• Microsoft introduces the Windows App Development (winapp) CLI. For some reason

Xbox and gaming

• Microsoft refreshes the Xbox Cloud Gaming web experience — bigger changes coming?
• Fable is coming to Xbox, PC, PS5 in late 2026

Tips and picks

• Tip of the week: Choose a single password manager, make your life easier
• App pick of the week: Proton Pass
• RunAs Radio this week: Business Process Automation in 2026 with Ian Cooper
• Brown liquor pick of the week: Tullibardine 18
  

Hosts: Leo Laporte, Paul Thurrott, and Richard Campbell

Download or subscribe to Windows Weekly at https://twit.tv/shows/windows-weekly

Check out Paul's blog at thurrott.com

The Windows Weekly theme music is courtesy of Carl Franklin.

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This week, the hosts go deep on out-of-band updates, unwanted "innovations," and the uneasy cost of tech's latest gold rush. Plus, securing a Microsoft account is not as hard as some think, and neither are passkeys once you get past the jargon. And for developers, AI Dev Gallery offers a fascinating glimpse at what you can do for free with AI used against a CPU, GPU, or NPU.

Windows 11

• Microsoft issues an emergency fix for a borked Windows Update. Right. A fix for a fix.
• Hell freezes over, if only slightly: Microsoft quietly made some positive changes to forced OneDrive Folder Backup. Donʼt worry, itʼs still forced (and appears to be opt-in, but isnʼt). But you can back out more elegantly. So itʼs opt-out, not opt-in, but a step forward. Plus, a new behavior
• Windows 11 on Arm PCs can now download games from the Xbox app (previously only through the Insider program)
• Over 85 percent of Xbox games on PC work in WOA now
• Prism emulator now supports AVX and AVX2 and Epic Anti-Cheat, and there is a new Windows Performance Fit feature offering guidance on which titles should play well.
• Beta: New 25H2 build with account dialog modernization, Click to Do and desktop background improvements. Not for Dev, suggesting itʼs about to move to 26H1
• Notepad and Paint get more features yet again. Notably, these updates are for Dev and Canary only, suggesting these might be 26Hx features (then again, versions don't matter, right?)

AI

• Just say no: To AI, to Copilot, and to Satya Nadella
• Our national nightmare is over: You can now (easily) hide Copilot in Microsoft Edge
• ChatGPT Go is now available worldwide, ads are on the way because of course
• Wikipedia partners with Amazon, Meta, Microsoft, more on AI

Xbox & gaming

• January Xbox Update brings Game Sync Indicator, more
• Solid second half of January for Xbox Game Pass
• Microsoft will likely introduce a free, ad-supported Xbox Cloud Gaming tier because of course

Tips & picks

• Tip of the week: Secure your Microsoft account
• App pick of the week: AI Dev Gallery
• RunAs Radio this week: Ideation to Implementation with Amber Vandenburg
• Liquor pick of the week: Estancia Raicilla

Hosts: Leo Laporte, Paul Thurrott, and Richard Campbell

Download or subscribe to Windows Weekly at https://twit.tv/shows/windows-weekly

Check out Paul's blog at thurrott.com

The Windows Weekly theme music is courtesy of Carl Franklin.

Join Club TWiT for Ad-Free Podcasts!
Support what you love and get ad-free audio and video feeds, a members-only Discord, and exclusive content. Join today: https://twit.tv/clubtwit