Microsoft Is 2nd Company to Hit $4 Trillion Market Value
Microsoft is the second company to join the $4 trillion market cap club. Its earnings were supercharged by a tremendous rise in artificial intelligence (AI) spending.
Microsoft Corp. (NASDAQ: MSFT | MSFT Price Prediction) has joined Nvidia Corp. (NASDAQ: NVDA) in the $4 trillion market cap club, only the second company ever to be valued that high. Based on a surge after earnings, its stock is up 26% this year. The S&P 500 is up 8%. Its earnings beat expectations. Its cloud operations and a tremendous rise in artificial intelligence (AI) spending supercharged the results.
It is rare for companies to be rewarded for big increases in spending. Microsoft said it would invest $120 billion in AI data centers. Based on announcements by other tech companies, it may be number one in that category. During the earnings call, CEO Satya Nadella commented, “We are going through a generational tech shift with AI …. We lead the AI infrastructure wave and took share every quarter this year. We continue to scale our own data center capacity faster than any other competitor.”
There is still some doubt—though it did not show up with Microsoft investors—that huge tech companies may have spent too much, too quickly, on AI. But Microsoft is not willing to lose the AI arms race to Meta, Amazon, or OpenAI. Several slightly smaller companies have made similar commitments to data center spending. The first is Elon Musk’s xAI, which recently got a valuation of $200 billion. Anthropic’s is $170 billion. Both are raising billions to increase the size of their server farms. None of these private companies makes money. Venture capitalists don’t seem to care.
Microsoft’s revenue in the most recent quarter rose 18% to $76.4 billion. The Fortune Global 500 ranks it as the 22nd largest company in the world based on revenue. Earnings gained 24% to $3.65 per share. Revenue in its Intelligent Cloud division, which includes its flagship cloud product Azure, increased 26% to $29.9 billion.
Once again, the bearish argument against Microsoft and several other megatech companies is that the use of AI will slow. That assumes that adoption will cool down. No single company in the industry is making that bet.
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