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In this PowerShell tutorial, the instructor demonstrates how to replace text within a string. The process begins by opening PowerShell and creating a string variable named "hello PowerShell." To replace the word "hello" with "by," the user utilizes the dot replace method. By specifying the original and new strings, executing the command successfully changes "hello PowerShell" to "by PowerShell." Additionally, the tutorial hints at further text manipulation, suggesting alternatives like swapping strings in future examples. This session emphasizes the basic functionality of string replacement in PowerShell.