New OneDrive behavior and how to stop it

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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