After Beating Earnings Expectations, Microsoft's Market Cap is Set to Reach $4 Trillion

Microsoft Corp. is on the verge of becoming the second company in history to achieve a $4 trillion market capitalization after delivering quarterly earnings that exceeded Wall Street forecasts. The tech giant’s stock surged as much as 9% in extended trading on Wednesday, climbing above $560. If even part of these gains hold when markets open on Thursday, Microsoft will officially reach the milestone. Earlier this month, Nvidia Corp. became the first company to hit a $4 trillion valuation.

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“Microsoft is finally getting the recognition it deserves because it essentially serves as the backbone for modern business operations,” said Kim Forrest, chief investment officer at Bokeh Capital Partners LLC. “From Word and Outlook to Excel, businesses rely on Microsoft’s tools daily. These earnings indicate an even stronger position for Microsoft, similar to Nvidia, as there are effectively no alternatives to what it provides.”

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The latest results reinforced Microsoft’s status as a dominant force in the ongoing artificial intelligence (AI) boom that has fueled gains for megacap technology stocks and lifted the broader equity market over the past few years.

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A key driver of this success has been its cloud business. Revenue from Azure, Microsoft’s closely watched cloud-computing platform, grew 39% in the quarter—well above analysts’ expectations of 34%. This robust growth further cements Azure as a central player in the AI revolution.

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On a call with analysts, Chief Financial Officer Amy Hood highlighted the company’s aggressive investment plans, forecasting fiscal first-quarter capital expenditures to exceed $30 billion. Additionally, Microsoft anticipates double-digit revenue growth for the full year. Azure is expected to post 37% growth in the upcoming quarter, surpassing prior forecasts and signaling sustained demand for its cloud services.

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Among the elite group known as the “Magnificent Seven” mega-cap tech stocks, Microsoft is currently the second-best performer this year. Since April 8, when markets tumbled following then-President Donald Trump’s sweeping tariff threats, Microsoft shares have rebounded sharply. The stock has surged nearly 45% from that trough, closing just below a record high before Wednesday’s earnings release.

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This performance marks a significant turnaround for Microsoft. In 2024 and the first quarter of 2025, it lagged behind its peers and was the only member of the Magnificent Seven trading in negative territory during that period.

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Investor skepticism stemmed from concerns about Microsoft’s positioning in AI and slower-than-expected Azure growth. However, recent results have alleviated many of these worries, showing strong momentum in its AI-driven businesses and reinforcing its cloud leadership.

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Analysts on Wall Street remain overwhelmingly positive on Microsoft’s prospects. Of the 72 analysts covering the stock, 65 have issued a buy rating, while only one has assigned a sell rating, according to Bloomberg data. The average 12-month price target stands at $554 per share, suggesting about 8% upside from Wednesday’s close.

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The company’s rise toward a $4 trillion valuation underscores its crucial role in shaping the technology landscape. As AI adoption accelerates across industries, Microsoft’s integrated suite of software and cloud services positions it as an essential player in modern business infrastructure. With no clear substitutes for its enterprise tools and a strong foothold in AI, Microsoft appears poised to maintain its upward trajectory, potentially joining Nvidia as one of the few companies in history to achieve a $4 trillion market cap.

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