'Watershed moment for AI revolution': Microsoft blows past $4tn valuation

Daily Mail​

31-07-2025

US tech giants Meta and Microsoft have smashed market expectations with performance analysts are hailing as a 'watershed moment' in the artificial intelligence revolution.
Microsoft became the third company to surpass $4trillion in market capitalisation as its shares soared in response to a fourth-quarter profit of $34.3billion, up 24 per cent year-on-year, driven by growth in its Azure cloud business.
Azure revenues soared 34 per cent to surpass $75billion over one year, Microsoft said, as it forecast double-digit growth for the next 12 months.
And Microsoft forecast its largest ever planned capital expenditure at $30billion for the first quarter to meet soaring AI demand.
It follows the group's multibillion-dollar bet on OpenAI, which powers its Office Suite and Azure offerings with cutting-edge AI, and has helped fuel the the stock to more than double its value since ChatGPT's late-2022 debut.
Microsoft shares jumped more than 9 per cent overnight in response to a peak of $561.28 per share. They have added almost 30 per cent over the last year.
Gerrit Smit, lead portfolio manager of the Stonehage Fleming Global Best Ideas Equity fund, said: 'Microsoft has proven with its results that it is the preferred technology stock to own to sustainably participate in the high growth of the global fourth industrial revolution.
'It is in the process of 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.'
Meanwhile shares in Facebook's parent company Meta soared 12.2 per cent to trade at $781.14 per share by mid-afternoon on Thursday.
It came as the social media giant crushed analysts' sales and profit targets, even as it poured billions of dollars into AI.
Higher advertising and a growing user base on its social media platforms drove profits 36 per cent higher to $18.34billion for its second quarter as revenues soared 22 per cent.
Meta also doubled down on its AI ambitions, forecasting third-quarter revenue that blew past Wall Street estimates the technology supercharges its core advertising business.
The social media giant upped the lower end of its annual capital spending guidance by $2billion, shortly following a similar move from Google owner Alphabet.
Meta has now achieved back-to-back record revenues since September 2022.
Ben Barringer, head of technology research at Quilter Cheviot, said Meta has also 'kept a lid on operating costs' by hiring 'fewer yet better people for its AI push'.
Watershed moment for AI stocks?
Analysts at Wedbush described Microsoft and Meta's 'eye-popping' results as a 'washed moment for the AI revolution' that will be 'remembered in the market for many years'.
Three of the 'Magnificent 7' tech companies – Nvidia, Apple and now Microsoft – have surpassed a $4trillion market cap.
But not all of the companies have been riding the AI wave higher this year, with Apple, Amazon and Alphabet shares underperforming peers, and Tesla shareholders suffering a particularly tough year.
But Wedbush thinks investors are underestimating the 'underlying AI driven growth ahead from Mag 7 tech stalwarts'.
They wrote in a note: 'Our bullish view is that investors are still not fully appreciating the tidal wave of growth on the horizon from the $2trillion of spending over the next three years coming from enterprise and government spending around AI technology and use cases.
'We have barely scratched the surface of this fourth industrial revolution now playing out around the world led by the big tech stalwarts such as Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon.'