Microsoft is now the second company ever to surpass $4 trillion in market valuation, following artificial intelligence giant Nvidia.
Microsoft, which is traded under the ticker “MSFT”, is continuing to surge and as of noon in New York City (16:00 GMT) on Thursday, it is up 4.6 percent from the market open.
The technology behemoth said it will spend $30bn in capital spending for the first quarter of the current fiscal year to meet soaring artificial intelligence (AI) demand. Microsoft also reported booming sales in its Azure cloud computing business on Wednesday.
“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, Stonehage Fleming Global Best Ideas Equity Fund.
Redmond, Washington-headquartered Microsoft first cracked the $1 trillion mark in April 2019.
Its move to $3 trillion was more measured than that of technology giants Nvidia and Apple, with AI-bellwether Nvidia tripling its value in just about a year and clinching the $4 trillion milestone before any other company on July 9.
In its earnings report, revenue topped $76.4bn.
‘Slam-dunk’
“This was a slam-dunk quarter for MSFT [Microsoft] with cloud and AI driving significant business transformation across every sector and industry as the company continues to capitalize on the AI Revolution unfolding front and center,” Dan Ives, senior analyst at Wedbush Securities, said in a note provided to Al Jazeera.
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 late-2022 debut.
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.
“We closed out the fiscal year with a strong quarter, highlighted by Microsoft Cloud revenue reaching $46.7bn, up 27 percent [up 25 percent in constant currency] year-over-year,” Amy Hood, executive vice president and chief financial officer of Microsoft, said in a statement.
However, Microsoft’s surge in market value is overshadowed by a wave of layoffs at the tech giant. Earlier this month, the company laid off 9,000 people, representing 4 percent of its global workforce, while doubling down on AI.
Lately, breakthroughs in trade talks between the United States and its trading partners ahead of US President Donald Trump’s August 1 tariff deadline have buoyed stocks, propelling the S&P 500 and the Nasdaq to record highs.
Meta Platforms also doubled down on its AI ambitions, 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 – signalling that Silicon Valley’s race to dominate the artificial-intelligence frontier is only accelerating.
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