Microsoft hits $4 trillion market valuation, second tech giant to do so after Nvidia

WEB DESK: Microsoft surpassed a $4 trillion market valuation on Thursday, making it the second publicly traded company after Nvidia to reach this milestone following a strong earnings report the night before. Headquartered in Redmond, Washington, Microsoft first crossed the $1 trillion mark in April 2019. Its rise to $3 trillion was more gradual compared to Nvidia and Apple, with Nvidia tripling its value within about a year to hit the $4 trillion mark first on July 9.

The company’s recent surge was fueled by robust sales in its Azure cloud computing division, along with a forecast of a record $30 billion in capital expenditures for the upcoming quarter to support rising AI demand. Gerrit Smit, lead portfolio manager at Stonehage Fleming Global Best Ideas Equity Fund, noted that Microsoft is increasingly transforming into a cloud infrastructure and enterprise AI leader, maintaining profitability and strong cash flow despite significant AI-related investments.

Recent progress in US trade negotiations with international partners ahead of the August 1 tariff deadline has also boosted stocks, driving the S&P 500 and Nasdaq to new highs. Microsoft’s planned record capital spending for the quarter positions it to possibly outspend competitors in the coming year.

Microsoft’s Azure cloud revenue surges as AI spending pays off

Meanwhile, Meta Platforms reaffirmed its AI ambitions during its earnings call, projecting third-quarter revenue that surpassed Wall Street expectations thanks to AI-driven growth in advertising. The company also increased its annual capital expenditure guidance by $2 billion shortly after Alphabet announced a similar increase.

Investor confidence in Microsoft has been growing, supported by consecutive record revenues since September 2022. The stock’s rally was further enhanced by the company’s recent workforce reductions—laying off thousands—and its intensified focus on AI investments to solidify its leadership as businesses accelerate AI adoption.