Microsoft becomes second public company to reach $4tn valuation amid AI boom
Microsoft, headquartered in Redmond, Washington, first cracked the $1tn mark in April 2019.
Its move to $3tn was more measured than technology giants Nvidia and Apple, with the chipmaker tripling its value in just about a year and clinching the $4tn milestone before any other company on 9 July.
The technology behemoth reported booming sales in its Azure cloud computing business on Wednesday and forecast a record $30bn in capital spending for the first quarter of the current fiscal year to meet soaring AI demand.
'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,' said Gerrit Smit, lead portfolio manager at Stonehage Fleming Global Best Ideas Equity Fund.
Lately, breakthroughs in trade talks between the US and its trading partners ahead of Donald Trump's 1 August tariff deadline have buoyed stocks, propelling the S&P 500 and the Nasdaq exchanges to record highs.
Its capital expenditure forecast, its largest ever 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 in its earnings call Wednesday, forecasting third-quarter revenue that blew past Wall Street estimates as artificial intelligence 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.
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Wall Street's surging confidence in Microsoft comes on the heels of back-to-back record revenues for the tech giant since September 2022.
The stock's rally had also received an extra boost as the tech giant trimmed its workforce, laying off thousands in recent months, and doubled down on AI investments determined to cement its lead as businesses race to harness the technology.
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