Microsoft’s market capitalisation surpassed $4-trillion on Thursday after issuing a blockbuster earnings report a day earlier, becoming the second publicly traded company after Nvidia to surpass the milestone.
The technology behemoth forecast a record $30bn in capital spending for the first quarter of the current fiscal year to meet soaring AI demand and reported booming sales in its Azure cloud computing business on Wednesday.
Shares of Microsoft were up 6.6% at $546.33 shortly after the start of trading but the gain was pared to 4.8% by midmorning.
“It is becoming more of a cloud infrastructure business and a leader in enterprise AI, doing so very profitably and cash generatively despite the heavy AI capital expenditures,” said Gerrit Smit, lead portfolio manager at Stonehage Fleming’s Global Best Ideas Equity Fund.
Microsoft, based in Redmond, Washington cracked the $1-trillion mark in April 2019. Its move to $3-trillion was more measured than technology giants Nvidia and Apple, with AI-bellwether Nvidia tripling its value in about a year and clinching surpassing $4-trillion before any other company on July 9.
Apple was last valued at $3.11-trillion.
Trade talks
Breakthroughs in trade talks between the US and its main trading partners ahead of President Donald Trump’s August 1 tariff deadline have buoyed stocks, propelling the S&P 500 and the Nasdaq to record highs.
Microsoft’s multibillion-dollar bet on OpenAI is proving to be a game changer, powering its Office Suite and Azure offerings with cutting-edge AI and fuelling the stock to more than double its value since ChatGPT’s debut in late 2022.
Its capital expenditure forecast, its largest for a single quarter, has put it on track to potentially outspend its rivals over the next year.
Meta Platforms also doubled down on its AI ambitions, forecasting third-quarter revenue that blew past Wall Street estimates as AI supercharged its core advertising business.
The social media giant upped the lower end of its annual capital spending by $2bn — just days after Alphabet made a similar move — signalling that Silicon Valley’s race to dominate the AI frontier is only accelerating.
Amazon.com — the biggest US cloud provider — which is due to report earnings after markets close on Thursday, rose 1.7%.
Wall Street’s surging confidence in the company comes on the heels of back-to-back record revenues since September 2022.
The stock’s rally had also received an extra boost as the tech giant trimmed its workforce and doubled down on AI investments — determined to cement its lead as businesses race to harness the technology.
While sweeping US tariffs had investors bracing for tighter business spending, Microsoft’s strong earnings have shown that the company’s books have yet to take a hit from the levies.
Reuters
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