Microsoft Reaches $4T Market Cap Amid AI Surge, Joins Nvidia

Microsoft's market capitalization has reached $4 trillion, making it the second company to achieve this milestone, after Nvidia. The tech giant's Q1 earnings exceeded expectations, with revenues up 18% to $76 billion and net income rising 23% to $34.3 billion, driven by growth in cloud computing and AI. This has led to ETFs holding Microsoft as a large holding outperforming the Nasdaq Composite's 9.5% rise this year.

Microsoft has officially become the second company in history to reach a market capitalization of $4 trillion, following Nvidia. This milestone was achieved after Microsoft reported quarterly earnings that exceeded Wall Street expectations, leading to a 9.1% surge in share price [1].

The tech giant's Q1 earnings exceeded expectations, with revenues up 18% to $76 billion and net income rising 23% to $34.3 billion. This strong performance was driven by growth in cloud computing and artificial intelligence (AI) services, with Microsoft's cloud business, Azure, seeing a 39% revenue increase, significantly outperforming analyst forecasts [1].

Microsoft's achievement is a testament to its growing influence in the AI space, where it has emerged as a key player fueling market capitalization gains across the tech sector. Within the so-called "Magnificent Seven" group of major tech firms, Microsoft now ranks as the second-best performer after a sharp drop in April, when its stock hit lows due to tariff threats from President Donald Trump [1].

Despite Microsoft's achievement, Nvidia remains the world's most valuable company. Boosted by investor enthusiasm over its dominant role in AI, Nvidia surpassed Microsoft in late June to take the top spot [2]. As of Wednesday, Nvidia shares were trading around $157.42, up 2.62% from Tuesday's close, with a market cap of $3.86 trillion, slightly higher than Microsoft's $3.69 trillion [2].

Wall Street responded positively to Microsoft's latest milestone. Of the 72 analysts covering the stock, 65 now rate it a "Buy," while only one recommends selling [1].

Microsoft's rise reflects its growing influence in the AI space, where it has emerged as one of the key players fueling a wave of market capitalization gains across the tech sector. A standout from the earnings report was Microsoft’s cloud business. Azure, its cloud computing unit, posted a 39% increase in revenue—well above the 34% analysts had forecast [1].

Meanwhile, Amazon's cloud computing results failed to impress, with shares dropping more than 7% after hours. Amazon's AWS reported a 17.5% increase in revenue to $30.9 billion, edging past expectations of $30.77 billion, but the company's AWS profit margins contracted to 32.9% from 39.5% in the first quarter of this year and 35.5% a year ago [3].

In contrast, Microsoft and Alphabet cited massive demand for their cloud computing services to boost their already huge capital spending. Amazon, however, noted capacity constraints that limited their ability to meet demand, suggesting that AI infrastructure investments are crucial for maintaining competitive edge in the tech sector [3].

References:
[1] https://www.fxleaders.com/news/2025/07/31/microsoft-surpasses-4-trillion-in-market-capitalization/
[2] https://uk.finance.yahoo.com/news/nvda-nvidia-poised-smash-records-144948367.html
[3] https://www.reuters.com/business/retail-consumer/amazon-cloud-computing-results-fail-impress-shares-dive-2025-07-31/