It's hard to find AI optimists these days.

AI-adjacent stocks have taken a battering in recent months, with Oracle and Microsoft particularly hard hit. Microsoft's stock is down over 20% from last summer's highs, as investors increasingly worry that the firm has over-extended and misjudged the opportunities therein.

Wider questions remain about the future viability of the tech. Cheaper Chinese models are pressuring the big U.S. hyper-scalers to find new efficiencies and strategies, as firms like OpenAI, SpaceX, Palantir, and Anthropic struggle to justify their more optimistic valuations. Some of the more dire warnings suggest the rife circular investments and financing could implode, threatening not only the associated companies, but potentially the entire global economy.

Recently, I caught up with Ed Zitron, head of EZPR and the Better Offline Podcast, who has become a prominent journalistic voice in AI analysis. Zitron's industry-leading tech newsletter Where's Your Ed At has become a primary source for those navigating the complex (and shady?) financial deals these companies are weaving, cutting through the industry hype with an oft-times scathing dose of reality.

I asked Zitron specifically about Microsoft's bets in this space, as the hype train objectively begins to lose steam.

Microsoft occupies an odd space in the "AI race," if you can still call it that at this point. Why do you think Wall Street and the stock market are rewarding Google but punishing Microsoft this year?

"It’s because Microsoft is uniquely awful at having to prove its worth outside of financials, and is run by some of the most decrepit, disconnected, and directionless leadership I’ve seen in any company I’ve ever monitored.

Whenever this company has to beguile investors, it can usually just throw up big money numbers and raise the price on Microsoft Office. This time it made the mistake of actually spending cash — and man, did AI save its ass from humiliation by distracting from its Activision-Blizzard acquisition! — on something, and doing so in the loudest way possible, because saying “AI” and spending lots of money on AI was all it took to make people buy your stock.

Sadly, $200 billion or more in capex in, Satya Nadella doesn’t really have a compelling answer as to where this money is going. He mentioned on their last earnings that they’d hit a $37 billion run rate for AI - around $3 billion a month in revenue, with the vast majority of that being OpenAI’s compute spend — and it didn’t get anybody hot and heavy, so the stock has kept tanking."

"This is also because Azure has been a much bigger business than Google Cloud.

Sundar Pichai is also better at the financial tricks than Satya Nadella, and worked out a way to make circular financing more conspicuous, selling Anthropic its own chips and then getting those chips put in Google data centers so that it can get the revenue from Anthropic, who it funds, buying compute. That huge bump in remaining performance obligations was, to be clear, mostly from circular financing.

I have no idea why Satya didn’t do this with OpenAI’s spend, and I have to wonder if he doesn’t start being really blunt about how much it’s boosting Azure revenue, even though that’ll probably work to his detriment.

Anyway, Google Cloud is a younger and smaller business and thus much easier to show explosive growth in. Satya is also not very good at marketing."

Do you think Microsoft will realistically see any long-term return on investment from its data center build out? Have they completely misjudged the potential?

"So, this depends on your definition of “ROI.” I think that, long-term, this will be seen as a disastrous, horrifying misallocation of capital, the kind of thing that will potentially get Satya Nadella fired.

In the short-term, Nadella got “ROI” out of AI in that it kept Microsoft interesting, and OpenAI’s compute spend buoyed Azure’s revenues without them ever having to disclose AI’s actual contribution. It was a shiny object to show investors, which gave them a vague sense of growth.

This was always a gamble, and because Microsoft started the era, it will inevitably be harmed the most by it.

No, I do not see any ROI at scale. Microsoft has spent over $200 billion on AI capex and will probably spend anywhere from $300 to $400 billion if it continues its pace past this year. It will need to make more than $500 billion in brand, spanking new revenue, in a very conspicuous way, to make any of this feel worthwhile."

"The problem they face is that the longer this goes on, the less incremental it can be. Showing modest growth in Intelligent Cloud and Business & Productivity isn’t going to make this problem go away.

The other is that the clock starts the second they stop spending on capex, and that includes a cut of anything more than 30%. Maybe they try and spread it out, but at some point they’re gonna have to stop, because this is a ludicrous expense.

But once they do, the street will start asking them to prove that they didn’t just nuke hundreds of billions of dollars and take on a bunch of debt for no reason.

I will say this: Amy Hood is very good at her job, and likely the only reason Satya Nadella hasn’t blown up the entire company."

Microsoft's early investment in OpenAI was initially hailed. In your research, how has that partnership panned out? Reporting suggests it hasn't gone well …

"At first, OpenAI must have seemed like the best thing that happened to Microsoft since it won that antitrust trial because the judge talked to the media. It was the single-most buzzy company in the world, and it had to spend money on Azure.

Satya Nadella could say that he had backed the next big tech titan, all while capturing the entirety of its value and cloud spend. The original deal - owning all the IP, making Azure their only cloud provider, all that stuff was a masterstroke.

Except it’s very obvious that something went sour there in 2024 or early 2025, likely when OpenAI demanded Microsoft build more compute than it wanted to. It must have also become clear that owning all of OpenAI’s IP and models and being able to power their services with it wasn’t actually helping Microsoft enough to justify the capex, so they got desperate and bought Mustafa Suleyman’s crappy little company so he’d bring that DeepMind magic to Microsoft."

"Also, Sam Altman very clearly started making demands that were effectively “change the agreement to our benefit for no apparent reason,” and Microsoft embarrassed themselves making any concessions for him. I think that Satya had assumed he had full control of Altman, and when that wasn’t apparent, I think it weakened both his and Microsoft’s position.

And, if I’m honest, Microsoft has embarrassed itself with AI - substandard models, lots of noise but not a lot of actual stuff, running GitHub Copilot at a massive loss for several years, then turning on token-based billing and creating a bunch of bad blood for no measurable gain?

The partnership was great when Satya had control, and the moment he let Altman buy compute from other companies was the moment he lost it, even though it was absolutely the right thing to do."

Windows users have backlashed pretty hard against some of Microsoft's AI products, including things like random Copilot buttons and Windows Recall. Do you see Microsoft finding any realistically good and viable uses for LLMs?

"Nope! I don’t remember the last time that Microsoft made anything that was both new and good, and every “idea” that Microsoft has is literally somebody else’s! Copilot Cowork is Claude Cowork, GitHub CLI is Claude Code, Scout is Codex or some other agentic crap; it’s all the same thing in the glossy Microsoft wrapper that used to mean “good but expensive” but now means “weird and sterile.”

This is not a product company, and the only thing they seem to be able to do with talent is lay it off. Nobody wants anything they’re selling other than for the products they like to work like they used to. If I surveyed 100 people about what they’d change about Microsoft, I bet at least 30% of them would say “remove Copilot.”

For that to change would require Microsoft to make a completely different product."

What do you think the AI landscape will look like in 5 years, if you had to predict?

"These are all guesses, and I can’t append them to any time period. I’m pulling them out of thin air — I can’t see the future! Nobody can! These are things that could happen far more than they are for sure events.

1. LLMs are gone from the cloud other than for obscure GCP/Azure/AWS instances with AI GPUs for people doing very specific things, all of which cost way too much to do regularly.

Whatever LLMs survive are a boring on-device situation you run on a $100k workstation, and that’s not very common because they’re pretty expensive. That being said, this might also be what happens to the large amounts of GPUs that are left for dead after the bubble pops.

2. Eventually, the big labs have to start doing aggressive cost cuts, which up usage but up costs, or cost increases, which destroys usage. Either way, growth is slowing because of token-minimizing, and it’ll accelerate and eventually break the companies."

"OpenAI dies or gets absorbed into Microsoft, who jacks up the prices and unwinds the business. The same happens to Anthropic, which likely becomes a much smaller company that’s effectively a subsidiary of Google and Amazon.

3. Microsoft does a $5bn-$10bn write-down of GPUs and Nadella is booted in favor of Amy Hood. Maybe more!

4. The software industry enters a prolonged depression within the next few years because growth starts to stumble in one of the major hyperscalers. Remember: Anthropic and OpenAI are currently boosting the revenues of Microsoft, Google and Amazon, to a level that I really should look into!

5. NVIDIA’s revenues eventually return to the 2023 era, single-digit billions of dollars annually. I also expect some sort of write-down on their side too."

A huge thanks to Ed Zitron — now it's your turn

Thanks a ton to Ed Zitron for joining us on this piece. Be sure to check out Ed Zitron's podcast and newsletters here; both are full of incredible research and insights into the AI biz more recently, but also tech in general.

Often when I'm writing about AI, I feel like the big players are gaslighting me into believing that the tech is good enough to solve all of humanity's problems, if we'll just hang on and accept a little bit more (a lot more) compute. While it seems AI does have a role to play in parsing large quantities of data and tracking anomalies humans might miss, the "hyperscale" opportunities increasingly seem far-fetched and vague as we head through the current cycle.

Where it all ends up remains anyone's best guess. Perhaps some kind of incredible breakthrough will give AI the nuance and accuracy it needs to actually be a viable general-purpose assistant — rather than an expensive mimicry and content theft machine.

Perhaps its pairing with robotics will enable real opportunities that have so far eluded the big corps. Or perhaps the simple truth is: there's no real room for optimism here. Perhaps we've all been conned by something that seems suspiciously capable on the surface, until you actually put it to any form of real work.

What do you think? Hit the comments, let's talk.

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Microsoft has unveiled a huge update to search on Windows 11 that look to be focused on improving the search experience with more accurate results, less reliance on the web, and even a removal of annoying ads and promotional material.

"You’ve have been asking for search that is faster, more relevant, and easier to use—whether you’re opening an app, finding a file, or changing a setting," Microsoft says in a new blog post. "Because the Windows Search Box is where many people start, we focused first on making results more dependable, easier to scan, and clearer before you click."

The company is highlighting several key improvements, including clearer results that does a better job at showing why a search result is appearing when a query has been typed, alongside prioritizing local results before reaching out to the web.

Search is also getting better at handling things like typos, which should help surface the right results even when the user misspells an app or file. The search home pane will no longer show MSN or Bing content, and promotional content and ads will no longer appear in search results.

Here's a complete list of the changes Microsoft has announced for search on Windows 11:

• A calmer home screen. Search home has been simplified to reduce visual clutter and make it easier to get back to recent searches quickly.
• Clearer results. Search does a better job showing where a result comes from—app, setting, file, web result, or Store suggestion—so it’s easier to tell what you’re looking at and where you will go before you click.
• Promotional content has been removed from web results. Web results show the most relevant answer, instead of first showing related products and promotions, helping search feel more focused and less distracting.
• You’re in control of web and Microsoft Store results. A new setting in Settings > Privacy & Security > Search lets you choose whether web and Microsoft Store suggestions appear alongside local results.
• Local results prioritized when they’re the better match. Apps, settings, and files more reliably appear ahead of web and Store suggestions when your content is the stronger match. System items like This PC and Recycle Bin are easier to discover.
• Finding apps is more forgiving. Search is better at handling typos, dropped letters, extra letters, and partial words for apps. Queries like “utlook” can still find Outlook.
• Settings results are improving. We’ve made a first round of ranking improvements to help more relevant settings appear higher in results, with more tuning planned in the coming months.
• Finding files is improving. Search is better at surfacing the right local files with added support for two-character file searches. We’ve also made improvements to show cloud and connected files in results when they’re the stronger match. These changes help you get to the document, download, or folder you are looking for faster.
• Reliability is improving. Improved search reliability, including reducing likelihood of crashing and loading issue, with more work underway.

These upgrades are now rolling out to Windows Insiders in the Experimental Channel, and are expected to roll out to all Windows 11 users later this year. Insiders may not see the changes right away as they are rolling out in waves.

These improvements are part of Microsoft's larger Windows K2 effort, which is an effort to fix Windows 11's biggest problems and reposition the platform as a viable competitor alongside macOS and Linux.

Search has been a sore point of Windows for a number of years, and so hopefully these improvements will be exactly what Windows users have been waiting for to bring it back up to par with the rest of the competition.

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Windows 11 has a new search box on the way, or at least a slightly larger one. The search box within the Windows 11 Start menu will be four pixels taller if a change that's currently in preview ships to everyone.

That's four more entire pixels of height dedicated to searching for files or using the improved search capabilities of Windows 11. The change, which was accidentally included in release notes for a preview build, was the butt of jokes. But I think it also shows something bigger (pun intended).

Windows 11 has had design inconsistencies for years. Context menus are a mess and the operating system has a mix of features that originated in different decades. The Windows K2 initiative aims to reduce the pain points of Windows 11. As part of the push, Microsoft will also iron out inconsistencies.

Biggest News of the Week

With the development of Windows 11, if design consistency is thought about at all, it's an afterthought. The OS is several operating systems in a trenchcoat, resulting in a mismatched design.

But even within individual apps or settings, Windows 11's design lacks polish. The infamous one pixel border around apps infuriates some people and has been a hot-button topic for years.

If you look hard enough, you'll find tiny issues throughout the design of Windows 11. Windows not aligning or inconsistent menus do not break the operating system, but they do make it look unpolished. If Microsoft wants to convince people it cares about Windows 11, the OS needs to look like a finished product.

Small changes like resizing the search box in the taskbar, which appears to have been done to align with Copilot Search, add up. Attention to detail matters.

While the Windows K2 initiative may be felt most through its impact on RAM usage or other elements that affect performance, it can also give Windows 11 a refreshed look that improves the overall computing experience.

Shopping with Sean

A growing number of Windows 11 laptops are on sale. If you need a budget-friendly convertible, a premium-quality clamshell laptop under $1,000, or a brand-new laptop with a Snapdragon X2 and a beautiful OLED display, there are sales worth a look.

Join us on Reddit at r/WindowsCentral to share your insights and discuss our latest news, reviews, and more.

Microsoft is exploring several improvements to the Windows 11 shell and user experience that will incorporate your smartphone into more aspects of the OS. According to my sources who are familiar with these plans, the company is working to expand and improve Phone Link's smartphone integration experiences so that they feel more native to Windows.

First up, I hear that the Phone Companion in Start is set to receive a handful of upgrades. It's gaining the ability to show more recent activities, with users being able to scroll through the list without needing to open the Phone Link app. I've also heard that users will be able to hover over activities to see more information, such as an entire message or photo.

I've also heard that a new dedicated smartphone flyout is being tested, which will exist on the Taskbar in the system tray. The phone icon will be present whenever your phone is connected, and clicking on it will open a flyout that provides the user with overview of their phone status.

It'll feature buttons to toggle things like do not disturb, vibrate mode, find phone, and more. You'll also be able to share files directly to your phone by dragging them to the icon.

Another feature Microsoft is looking into is syncing your clipboard history between your phone and PC using Windows 11's dedicated Clipboard feature. Currently, you can sync your clipboard from your phone and PC, but it only remembers the last thing you copied. Clipboard history would provide you with a synced list of everything that has been copied.

Microsoft is also working on a new dedicated Messages app for Windows 11 which will sync your phone's SMS conversations and let you respond and start chats with your contacts. This experience builds upon the messages feature already present in the Phone Link app, but will exist as a standalone app that can be pinned and launched from the Start menu.

Sources say that all of these features are being explored and prototyped internally, but that doesn't guarantee they'll ship as described. The company is likely planning to gather feedback from Insiders before committing to ship anything concrete.

I understand that the goal of these improvements is to slowly integrate Phone Link capabilities natively across the Windows shell. Phone Link has existed as a standalone app on top of Windows 11, but over the last year or so we've slowly seen new smartphone integration features added directly to the Windows OS, circumventing the Phone Link app entirely.

Features such as the ability to see your phone's file system and photos in the File Explorer app, or utilize your phones camera as a webcam on your PC are just two examples of how Microsoft have already been working to integrate your smartphone more seamlessly into the Windows 11 UX.

I don't know what the future holds for Phone Link app itself, but it's clear that Microsoft is not done with tying your phone to your PC. It's working on more improvements that will make your smartphone feel like a natural extension of your computer, with experiences that feel native to the Windows UX.

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Microsoft has spent years building different ways for users to recover Windows. From System Restore and Reset this PC to the other tools available in the Windows Recovery Environment (WinRE) and OEM recovery solutions, Windows 11 already offers several ways to repair or reinstall the operating system. Cloud rebuild is the latest addition to that toolkit, but it isn't designed to replace those tools.

Cloud rebuild is currently available as a preview feature. Until it's fully available, Microsoft recommends using it for testing and evaluation rather than production devices. Also, the company notes that the experience, available options, and workflow may still change before the feature reaches general availability.

Instead of attempting to repair an existing installation, Cloud rebuild reformats the system drive and reinstalls Windows 11 using files downloaded from Windows Update. When the process finishes, the computer boots into the Out-of-Box Experience (OOBE), allowing you to set it up like a new device.

Cloud rebuild isn't another version of Reset this PC

At first glance, it's easy to assume Cloud rebuild is simply a renamed version of the Cloud download option available through Reset this PC. Microsoft, however, describes Cloud rebuild as a separate recovery experience with a different workflow.

According to Microsoft, unlike Reset this PC, Cloud rebuild downloads both the target Windows 11 image and the device's drivers from Windows Update. The company says this allows the computer to roll back to a fully functional state without requiring USB installation media, a custom recovery image, or relying on the integrity of the existing installation.

The key difference is that Cloud rebuild is designed to rebuild the device from the Windows Recovery Environment (WinRE) without depending on the integrity of the existing setup.

Microsoft hasn't yet explained in more detail how Cloud rebuild differs internally from the existing Cloud download option in Reset this PC, so it's too early to conclude that it uses an entirely new recovery engine. However, based on the preview support page, the company appears to be positioning Cloud rebuild as a more complete recovery workflow designed to simplify the process of returning Windows 11 devices to a known-good state.

Perhaps more importantly, the feature reflects Microsoft's broader direction for Windows management. Whether Cloud rebuild eventually replaces some of today's overlapping recovery options remains to be seen, but it clearly signals the company's continued investment in cloud-based deployment and recovery.

Before using Cloud rebuild, here's what you need to know

Before using Cloud rebuild, it's important to understand that this isn't a repair tool. It completely replaces the existing installation by reformatting the system drive. As a result, locally installed apps, user accounts, settings, and files stored on that drive are removed during the process.

Also, files already synchronized with cloud services such as OneDrive aren't affected and can be restored after you sign back in.

Since the rebuild erases the existing installation, it's worth making sure your important files have been backed up before getting started. If you rely on OneDrive, verify that your files have finished syncing so the latest versions are available after the rebuild.

You'll also want to keep the computer connected to the internet and plugged into a power source throughout the process. Depending on your connection speed, the recovery can take some time to complete, and Windows 11 may restart the computer several times before it's finished.

How to start Cloud rebuild on Windows 11

In the current preview, Cloud rebuild is available through the Windows Recovery Environment (WinRE). From a working Windows 11 installation, open Settings > System > Recovery, click "Restart now" under Advanced startup, and allow the computer to restart into WinRE.

On the recovery screen, choose "Troubleshoot," and then select "Cloud rebuild."

After connecting to the internet, the feature verifies the appropriate edition, language, and build for the device before asking you to confirm that the system drive will be erased.

Once you confirm the operation by clicking "Install," the rebuild begins automatically.

During the installation, Windows 11 may restart several times. Microsoft recommends leaving the device connected to power and avoiding manual restarts or shutdowns until the process finishes, since interrupting the installation could leave the operating system unable to boot.

Microsoft's cloud-first recovery strategy continues

Cloud rebuild isn't Microsoft's first cloud-based recovery feature, but it may be one of the most comprehensive. Instead of relying on recovery partitions, USB installation media, or organization-maintained recovery images, the feature downloads the installation files directly from Windows Update and integrates with services such as Windows Autopilot, Microsoft Intune, Backup for Organizations, and OneDrive to restore managed devices.

The result is a recovery process that depends less on locally stored recovery files and more on Microsoft's online services. As long as the computer can connect to the internet and Windows Update has the necessary drivers, Cloud rebuild can restore the device without requiring a USB installer or a custom recovery image.

For organizations, the recovery process goes beyond simply reinstalling the operating system. Computers enrolled with Windows Autopilot and managed through Microsoft Intune can automatically re-enroll, restore policies, redeploy apps, and synchronize user settings after the rebuild is complete.

Windows recovery is slowly moving beyond USB drives

For years, one of Microsoft's standard recommendations for recovering a device has been to create USB installation media.

Cloud rebuild doesn't eliminate installation media altogether, but it makes it significantly less important in many situations. If WinRE is still functional and the computer can connect to the internet, Windows 11 can recover without another device, a USB flash drive, or a locally stored recovery image.

For many home users, that's a much simpler recovery process. For organizations, it reduces the need to maintain recovery images across large fleets of devices.

There are still important limitations

Cloud rebuild isn't magic. The feature currently requires Windows 11 on compatible hardware (so unsupported devices won't benefit from this feature), a healthy Windows Recovery Environment (WinRE), internet connectivity from WinRE, and hardware drivers that are available through Windows Update.

Those last two requirements are especially important. If the necessary networking or storage drivers aren't available through Windows Update, Cloud rebuild can't complete successfully.

The preview only scratches the surface

At this stage, Cloud rebuild remains intentionally limited. The preview can currently be started only from the Windows Recovery Environment (WinRE) or from an elevated Command Prompt.

Remote deployment through enterprise management platforms isn't available yet, although Microsoft says support for solutions such as Microsoft Intune is planned for a future release.

Windows Central's Take

Cloud rebuild isn't the kind of feature that grabs headlines. There's no redesigned interface and nothing flashy to demonstrate. However, after years of covering the operating system, I've learned that recovery features often become the most important ones the moment something goes wrong.

What I'm noticing is the decision to build the recovery experience around Windows Update. Instead of expecting users or network administrators to maintain recovery media, OEM images, or custom deployment images, Microsoft is increasingly shifting recovery toward cloud-based services. That's a simpler model and one that better reflects how devices are managed today.

I also think this feature has more potential for organizations than for home users, at least initially. The integration with Windows Autopilot and Microsoft Intune suggests Microsoft is thinking beyond simply reinstalling Windows 11. The goal appears to be restoring an entire managed device with as little manual intervention as possible.

That said, I'd like the software giant to better explain how Cloud rebuild differs from the existing Cloud download option in Reset this PC. Currently, the available information describes the workflow but leaves some important technical questions unanswered. Until those details are available (and until the feature reaches general availability), I see Cloud rebuild as a promising addition to Windows 11 recovery rather than a replacement for the tools users already have.

Would you trust Cloud rebuild to recover your Windows 11 PC, or would you still prefer using a USB installation drive? Let me know in the comments.

More resources

Explore more in-depth how-to guides, troubleshooting advice, and essential tips to get the most out of Windows 11 and 10. Start browsing here:

• Windows 11 on Windows Central — All you need to know
• Windows 10 on Windows Central — All you need to know

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Microsoft’s latest sustainability report sparked claims that the company produced 34 million metric tons of carbon emissions in a single year. That figure was never reported by the company. What the report actually shows is a 25 percent year‑over‑year increase driven by AI datacenter expansion and Microsoft’s decision to stop buying unbundled renewable energy certificates.

The Microsoft Environmental Sustainability Report shows a complicated progression of rising emissions caused by AI datacenters, controversial "greenwashing" tactics, and enough wiggle room to leave space for debate.

Real emissions vs estimated emissions

When I first read the coverage surrounding the Microsoft Environmental Sustainability Report, it seemed like a clear case of AI hurting the planet and a tech giant callously damaging the environment. I was ready to write a piece calling out Microsoft for setting carbon neutral goals and then increasing carbon emissions by 25% in a single year.

But as I do with any story I cover, I went to the source material and did some digging. What surprised me is that the Microsoft Environmental Sustainability Report does not indicate unbridled burning of fuel to power AI datacenters. Instead, it shows efforts to reduce emissions and make meaningful changes.

I want to be clear, AI datacenters do create high carbon emissions. Microsoft is not faultless when it comes to energy use or pollution. I think there is a lot more the company could do to help the environment. I also think there's some misunderstood data seeping onto social media and throughout the web.

The above chart from the Microsoft Environmental Sustainability Report shows Microsoft's actual reported emissions over the years and the estimated emissions without select interventions. The footnote on the chart directs to a clarifying statement on the estimate. I'll include the full footnote here but highlight the most relevant text:

"The solid line represents Microsoft’s reported greenhouse gas emissions (Scopes 1, 2, and 3) for FY20–FY25, prepared in accordance with GHG Protocol and management’s criteria, and uses a market-based emissions approach. The dotted line represents an illustrative counterfactual scenario of estimated emissions had select, discrete carbon reduction initiatives not been undertaken. These initiatives include energy efficiency improvements for XBOX consoles, renewable energy purchases, sustainable aviation fuel (SAF) and sustainable marine fuel (SMF) certificates, and supply chain decarbonization of Surface devices. The difference between the two lines is an estimate of emissions avoided through these specific initiatives relative to a scenario without those initiatives occurring. This estimate is directional in nature, does not represent the full scope of Microsoft’s decarbonization efforts, and is not part of our reported greenhouse gas inventory. It should not be interpreted as a comprehensive measure of total emissions reductions or as additive to other carbon reduction or removal claims."

Basically, the chart shows Microsoft's actual emissions and then a rough estimate of how much the company would have emitted had it not taken steps to reduce its carbon footprint. But Microsoft did take those steps. Microsoft did not have 34 million metric tons of carbon emissions in the last year. The actual emissions figure is 20 million metric tons.

That's still a massive amount of emissions, and 20 million metric tons is a 25% increase year-over-year, but there's some needed context.

What are unbundled renewable energy certificates?

Microsoft's carbon emissions increased by 25% in a single year. The increase was driven primarily by Microsoft's expansion of datacenter infrastructure and the fact that the company paused the purchase of unbundled renewable energy certificates.

In February 2025, Microsoft announced that it "ceased purchasing non-additional, unbundled renewable energy certificates." That decision led to the massive jump in emissions seen in the recently published sustainability report (in conjunction with AI datacenter infrastructure expansion).

Renewable energy certificates (RECs) represent the legal ownership of the "renewable-ness" of generated electricity. Unbundled RECs are sold separately from the electricity itself.

The United States Environmental Protection Agency notes that "Unbundled Renewable Energy Certificates (RECs) refer to RECs that are sold, delivered, or purchased separately from electricity. RECs provide no physical delivery of electricity to customers and as such the customer is purchasing power from a separate entity than the one selling them the REC."

The separation of generated electricity from the legal ownership of the "renewable-ness" is controversial (that phrase comes straight from the EPA).

Many, including myself, view unbundled RECs as a form of greenwashing. Microsoft or any other company can legally say they are powered by renewable electricity without actually using the electricity that was generated.

The defense is that buying unbundled RECs financially contributes to the development of renewable energies.

Microsoft did not refer to unbundled RECs as a form of greenwashing, but its statement is telling:

"While we continue to apply the carbon fee to investments in emissions reductions, we have ceased purchasing non-additional, unbundled renewable energy certificates. We are refocusing the use of these funds on more long-term, higher-impact investments across carbon reduction, carbon removal, and clean electricity procurement. These interventions are expected to more effectively help us achieve our goal of becoming carbon negative by 2030 and may take us out of carbon-neutral position."

Microsoft implied that unbundled RECs are not the most effective way to have a long-term positive impact on the environment.

The rest of the report

The Microsoft Environmental Sustainability Report is 65 pages of dense information. It links to several external resources as well. If it were a paper report, there'd be a good joke here about an environmental report killing so many trees.

A large portion of the report is dedicated to discussion about Microsoft's use of water, which is a critical component of its environmental strategy. Notably, Microsoft replenished more water than it withdrew in the year.

Because of the size of the report, I've focused on the carbon emissions of Microsoft, but I suggest people read the entire report to get perspective on what's being done and where Microsoft still falls short.

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With Sony planning to stop making discs for games and revoke access to movies and TV shows people paid for, physical media is more important than ever. Xbox is considering a disc-to-digital program for Project Helix, proving Microsoft weighs the importance of physical media when making decisions.

But the physical media debate isn't really about discs; it's about control. People want to control the content and devices they've purchased. Microsoft's newly expanded options for resetting PCs showcase how choice and control can be given to consumers.

Like many, I've spoken out against Sony's plans and advocated for physical media to be preserved. So, it might come as a surprise to hear that I'm happy about the new option to reset a Windows 11 PC that relies entirely on the cloud and does not use a USB drive.

While I advocate for physical media to preserve ownership of games and movies, when it comes to the pure utility of fixing a broken PC, convenience wins.

A new feature called Cloud rebuild is in testing on Windows 11. It lets you restore a PC to a clean state without needing an external drive.

What is Cloud rebuild on Windows 11?

Cloud rebuild is a feature that lets you reinstall Windows and your PC's drivers by using the internet. Rather than requiring a USB drive that's been set up, you can reset your PC entirely through the cloud.

Microsoft explained Cloud rebuild recently when the feature shipped to Insiders:

"Unlike Reset this PC, Cloud rebuild downloads both the target Windows image and the device's drivers from Windows Update, so the device comes back fully functional without USB media, without a custom image, and without depending on the health of the currently installed OS."

While Reset this PC and Cloud rebuild both let you recover your PC, they differ in important ways apart from the fact that one uses a USB drive and the other uses the cloud.

Reset this PC gives you the option to retain your personal files, which could save vital content from being lost. But even if you have an external USB install drive ready to go, you can only use Reset this PC if Windows is bootable.

The feature also requires you to have manually created a USB installer ahead of time on a working computer.

In contrast, Cloud rebuild works even if your PC refuses to boot. The downside is that it does not provide an option to maintain apps and files.

Cloud rebuild brings your PC to a clean slate with Windows working and device drivers in place.

The biggest advantage of Cloud rebuild is reliability. Cloud rebuild doesn't rely on a tool you've set up in advance or ensured was formatted correctly. It just pulls a fresh image and drivers through Windows Update.

All my files are stored on OneDrive and backed up elsewhere, so I don't need the option to retain my files. It would save a bit of time after a reset, but it's not essential.

Cloud rebuild does depend on having an internet connection, so a USB installer is still the safer option for people in low‑connectivity environments.

Let the people decide

Of course, having the option to use a USB drive or the cloud is best. While I personally prefer Cloud rebuild for restoring my PC, I want both options to be available. Many people prefer to have physical tools they know are reliable and that can run locally.

That's what the current debate about physical media comes down to: choice and control. The vast majority of game sales are digital, but people want the option to own physical media.

Windows 11 management is the same way. Some will rely on the cloud while others will have USB drives to reset their PC and SSDs stored away to back up files.

Cloud rebuild is the better option for my workflow, but the point isn’t to replace USB recovery. It’s to give people the choice and control. Just like physical media, recovery tools shouldn’t be taken away; they should coexist.

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