Microsoft Is 2nd Company to Hit $4 Trillion Market Value

By Douglas A. McIntyre Published Jul 31, 9:15AM EDT

24/7 Wall St. Key Points

Microsoft Corp. (NASDAQ: MSFT) is only the second company to join the $4 trillion market cap club.
A tremendous rise in artificial intelligence (AI) spending supercharged its earnings.

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Microsoft Is 2nd Company to Hit $4 Trillion Market Value — © wellesenterprises / iStock Editorial via Getty Images

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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.