Hajra Naz
Microsoft became the second company in history to reach a $4 trillion market valuation on Thursday. The milestone came after a blockbuster earnings report on Wednesday night boosted the tech giant’s shares.
Microsoft’s stock (MSFT) jumped nearly 4.5% after the market opened on Thursday, lifting its intraday valuation to $4.01 trillion. Shares have climbed roughly 28% since the start of the year.
This achievement comes just a year and a half after Microsoft hit the $3 trillion mark. The company first crossed $1 trillion in April 2019. Nvidia reached the $4 trillion milestone earlier this month, becoming the first company to do so.
AI Investment Driving Growth
The company has forecast a record $30 billion in capital spending for the current fiscal first quarter. Much of this investment will fuel its artificial intelligence ambitions.
Sales from Microsoft’s Azure cloud computing business are booming. Wall Street analysts have also noted that Microsoft’s Copilot AI chatbot has played a key role in driving growth for its Microsoft 365 enterprise software business.
Read More: Microsoft Enhances Copilot with AI-Powered Deep Research Tools
Comparison to Rivals
Microsoft’s climb to $3 trillion was more measured compared to rivals Nvidia (NVDA) and Apple (AAPL). AI leader Nvidia tripled its valuation in just about a year, reaching $4 trillion before any other company on July 9. Apple’s current market value is $3.12 trillion.
Boost From Trade Talks and Market Highs
Recent breakthroughs in trade negotiations between the US and its global partners have lifted investor sentiment ahead of President Donald Trump’s August 1 tariff deadline. These developments have pushed both the S&P 500 and Nasdaq to record highs.
Microsoft, now the second-largest US company, has rebounded nearly 50% from its April 2025 lows, when Trump’s tariff strategy sent shockwaves through global markets.
OpenAI Partnership as a Game-Changer
Microsoft’s multibillion-dollar partnership with OpenAI is proving transformative. The deal powers Microsoft’s Office Suite and Azure offerings with cutting-edge AI, driving the company’s stock to more than double in value since ChatGPT debuted in late 2022.
With exclusive access to OpenAI’s models, Microsoft has surged to the front of the generative AI race. This has supercharged its Azure cloud business, now the company’s top revenue driver, and strengthened its position against competitors like Google Cloud and Amazon Web Services.
Read More: OpenAI’s Fastest, Smartest GPT- 5 is here – Free for All Users
Record Revenues and Cost-Cutting Moves
Wall Street’s growing confidence is supported by Microsoft’s streak of back-to-back record revenues since September 2022.
The company’s stock rally has been fueled further by cost-cutting measures. Microsoft has streamlined operations, trimmed its workforce, and doubled down on AI investments in a bid to secure leadership in the rapidly expanding AI industry.
Layoffs Amid AI Transformation
Despite its rapid rise, Microsoft has been reducing headcount. Earlier this month, it announced plans to cut about 9,000 jobs—roughly 4% of its staff—marking its largest layoff since 2023.
These cuts follow the elimination of 6,000 positions in May. According to a company spokesperson, the July layoffs reflect advances in technologies that have boosted employee productivity. While AI was not mentioned directly, the timing coincides with Microsoft’s push to integrate AI across its operations.
CEO Satya Nadella stated earlier this year that AI now generates between 20% and 30% of Microsoft’s code. The company continues to invest billions into AI infrastructure as part of its long-term strategy.
