Microsoft reaches $4 trillion valuation after solid results

Microsoft hit $4 trillion in stock market value on Thursday, becoming the second publicly traded company after Nvidia to surpass that milestone following a blockbuster earnings report that showed its massive bets on AI are paying off.

Strong results from Microsoft and Meta Platforms late on Thursday also fueled gains in Amazon and sent chipmaker Nvidia to a record high, with the four heavyweight AI players gaining over half a trillion dollars in market value.

Wall Street's heavyweight players leading in AI - Nvidia, Microsoft, Amazon, Alphabet Meta Platforms - now account for a quarter of the S&P 500, according to LSEG data.

Microsoft forecast a record $30 billion in capital spending for the first quarter of the current fiscal year to meet soaring AI demand. It reported booming sales in its Azure cloud computing business and said its Copilot AI tools had surpassed 100 million monthly active users.

Microsoft's shares were last up 4.5% after climbing as much as 8%.

"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.

Meta Platforms also doubled down on its AI ambitions, forecasting quarterly revenue that blew past Wall Street estimates as artificial intelligence supercharged its core advertising business.

Redmond, Washington-headquartered Microsoft first reached a $1 trillion stock market value in 2019.

Its move to $3 trillion was more measured than Nvidia and Apple's, with AI-bellwether Nvidia tripling its value in just about a year and clinching the $4 trillion milestone on July 9.

Apple was last valued at $3.12 trillion.

Lately, breakthroughs in trade talks between the United States and its trading partners ahead of President Donald Trump's August 1 tariff deadline have buoyed stocks, propelling the S&P 500 and the Nasdaq to record highs.

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 fueling 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.

Meta upped the lower end of its annual capital spending by $2 billion - just days after Alphabet made a similar move - signaling that Silicon Valley's race to dominate AI technology is accelerating.

Cloud computing heavyweight Amazon.com rose 2% ahead of its quarterly report after the bell.

AI chip supplier Nvidia climbed 0.8%, lifting its market capitalization to a record $4.4 trillion.