Microsoft becomes second company to reach US$4T valuation after Nvidia

Microsoft became the second company to reach a US$4 trillion (S$5.20 trillion) market valuation on Thursday, after strong earnings showed the tech giant’s hefty investments in artificial intelligence (AI) are paying off. Reuters reported that Microsoft’s shares rose as much as 8%.

In early July, Nvidia became the first publicly traded company to reach a US$4 trillion market value after its shares rose 2.8% to US$164.42 (S$210.34).

Just this week, Reuters reported that Microsoft forecast a record US$30 billion in capital spending in the first quarter of the current financial year, driven by growing demand for AI. The company reported strong sales in its Azure cloud computing business and said its Copilot AI tools have surpassed 100 million monthly active users.

Its capital expenditure forecast, which is the company’s largest for a single quarter, has put it on track to potentially outspend its rivals over the next year.

Gerrit Smit, lead portfolio manager of Stonehage Fleming Global Best Ideas Equity Fund, said Microsoft is becoming more of a cloud infrastructure business and a leader in enterprise AI, “doing so very profitably and cash generatively” despite hefty AI capital expenditures.

The Redmond, Washington-headquartered company first reached a US$1 trillion valuation in 2019. /TISG

Read also: Microsoft launches first Southeast Asia AI research lab in Singapore

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