Xbox is in freefall, but Microsoft’s gaming platform could redeem itself as soon as next year. During AMD’s Q4 2025 earnings call on Tuesday, the chipmaker’s CEO, Lisa Su, said that “development of Microsoft’s next-gen Xbox featuring an AMD semi-custom SoC is progressing well to support a launch in 2027.”
Up until now, Xbox President Sarah Bond had only been ready to tell us the next Xbox console was indeed in development and would deliver a “premium experience.” The console likely won’t conform to any one game launcher. Instead, it could allow players to access platforms like Steam, Epic Games Store, and GOG as well as Xbox. Essentially, it will be a PC with a less-upgradable “semi-custom” AMD SoC (system on a chip).
Why is AMD talking about this console even before Xbox can start its next-gen media blitz? Likely because gaming hardware will be in the doldrums all throughout 2026. Su said the company expects a “decline by a significant double-digit percentage as we enter the seventh year of what has been a very strong console cycle.”
2026 may be an odd year for gaming hardware
The year will start off with the launch of Valve’s long-awaited Steam Machine. Su said the device will arrive early this year, confirming what Valve had already indicated to Gizmodo and others about release timing.
Valve’s PC/console hybrid will sport another “semi-custom” AMD chip, though in this case it will be based on older GPU microarchitecture, namely RDNA 3.5. Valve has claimed it will be powerful enough for 4K gaming with the help of upscaling, though judging purely by specs, it may not be as powerful as graphics-obsessed gamers may demand. Later this year, we may see new handheld gaming PCs sporting an Intel Panther Lake chip, but that may be it for new gaming hardware.
The difficulty will be getting gamers excited for new gaming hardware, especially if it costs anything more than the current generation of consoles. More than five years after launch, the PlayStation 5 and Xbox Series X cost more, not less, due to last year’s tariffs. A gaming-ready PC is now enormously expensive due to the ongoing memory shortage. We still don’t know the price of the Steam Machine, but based on Valve’s statements to this point, it likely won’t be cheap.
The next-gen Xbox may be even costlier. Numerous leaks from reliable sources like Moore’s Law is Dead on YouTube suggest that Microsoft’s PC-like console will use AMD’s newfangled RDNA 5 microarchitecture. The specs we’ve seen from leaks—including GPU core counts—support that this could indeed be a powerful machine for playing games at 4K with ray tracing enabled.
The industry may be even worse off without Xbox
Specs are one thing, but next-gen hardware success will depend on whether Microsoft can give gamers a real reason to care. If consoles become a “premium” device built only for the most-dedicated gamers with deep pockets, it will price out many more potential players. Judging by Xbox’s reported slowdown in hardware and services revenue, just because they can’t afford a new console doesn’t mean players will run out to buy an increasingly expensive Game Pass subscription. Xbox needs to offer gamers a whole new way to play, something that re-energizes Xbox as a lifestyle brand, rather than just another manufacturer of gaming hardware.
The gaming industry needs a win. A total of 33% of U.S.-based game developers who responded to the annual State of the Games Industry Report said they were laid off in the last two years. Many of those were due to Microsoft’s own cuts. Among its many in-house and partnered studios, Microsoft is responsible for major developers from Blizzard to Bethesda down to former indie darlings like Double Fine and Obsidian. Xbox’s slow demise will make a bad time for the gaming industry worse.
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