It’s pretty good at doing that, but not using the true surround data from your games. It’ll take in stereo data, and then upmix that to a fake 7.1 surround.
I never liked the use of “7.1” in the name, because it’s actually a stereo sound card that has a fake surround processing mode similar to a speaker crosstalk simulation. I’ve gone back and forth over the HyperX Cloud II’s 7.1 surround sound dongle. In the meantime, this dongle performs very similarly to the Cloud Alpha S dongle, except it has buttons for mic volume instead of game/chat balance on the front of it. I’m leaving the original review below for posterity, and I’ll have the new one linked here soon. I think that the “volume fix” firmware update I mention in the original article below also added the true 7.1 mode, and I didn’t catch it until now.
I just dug mine out of the closet for a different project I’m working on, and d iscovered through tinkering around in Windows settings that it does indeed support 7.1 input and features a similar 7.1 implementation to the one on the Cloud Alpha S USB dongle. EDIT August 1st, 2020: I’ve written an updated review of this device, and you can find that by clicking right here.