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The study aimed to investigate the underlying physics limiting the temperature stability and performance of non-surface passivated Al0.34Ga0.66N/GaN Hall effect sensors, including contacts, under atmospheric conditions. The results obtained from analyzing the microstructural evolution in the Al0.34Ga0.66N/GaN Hall sensor heterostructure were found to correlate with the electrical performance of the Hall effect sensor. High-resolution x-ray photoelectron spectroscopy studies revealed the signature of surface oxidation in the GaN cap layer, as well as a slight out-diffusion of “Al” from the AlGaN barrier layer. To prevent the formation of a bumpy surface morphology at the Ohmic contact, we investigated the impact of “Pt” top Ohmic contacts. The application of a top “Pt” contact stack resulted in a smooth Ohmic contact surface and provided evidence that the bumpy surface morphology in Au-based Ohmic contacts is due to the formation of an Al-Au viscous alloy during rapid thermal annealing. In the early stages of thermal aging, the small drop in contact resistivity stabilized with subsequent thermal aging past the initial 550 h at 200 °C. The outcome is that the Al0.34Ga0.66N/GaN Hall effect sensors, even without surface passivation, exhibited a stable response to applied magnetic fields with no sign of significant degradation after 2800 h of thermal aging at 200 °C under atmospheric conditions. This observed stability in the Hall sensor without surface passivation can be attributed to a self-imposed surface oxidation of the cap layer during the early stages of aging, which serves as a protective layer for the device during subsequent extended periods of thermal aging at 200 °C.