“Therefore, even with ongoing AI investments as we scale, we continue to expect full-year FY25 operating margins to be up slightly year over year.”

In context

“potential outcomes is wider than normal. Devices revenue should decline in the high teens. Search and news advertising ex-TAC revenue growth should be in the high teens, even on a strong prior year comparable. We expect to see continued growth in both volume and revenue per search with share gains across Edge and Bing. Overall Search and news advertising revenue growth should be in the mid-teens. And in Gaming, we expect revenue growth to be in the mid-single digits. We expect Xbox content and services revenue growth to be in the high single digits driven by first-party content. Now back to company guidance. We expect COGS of $23.6 to $23.8 billion or growth of 19% to 20% in constant currency and operating expense of $18 to $18.1 billion or growth of approximately 5% in constant currency. Therefore, even with ongoing AI investments as we scale, we continue to expect full-year FY25 operating margins to be up slightly year over year. Other income and expense is expected to be roughly negative $1.2 billion primarily driven by investments accounted for under the equity method. As a reminder, we do not recognize mark-to-market gains or losses on equity method investments. And lastly, we expect our Q4 effective tax rate to be approximately 19%. Now I’d like to share some closing thoughts as we look to the next fiscal year. We remain committed to investing against the strong demand signals we see for our services. So, as a reminder, our earlier comments on FY26 capital expenditures remain unchanged. We expect capex to grow, it will grow at a lower rate than FY25 and will include a greater mix of short-lived assets which are more directly correlated to revenue than long-lived assets. These investments, along with focused ex”