Microsoft Tops $4 Trillion Valuation; Cloud Strength Fuels New AI Growth Phase

TradingKey – Eastern Time on July 31, tech giant Microsoft (MSFT) opened with a strong surge of 8%, propelling the company's market capitalization to a historic milestone exceeding $4 trillion at approximately $4.1 trillion. Microsoft thus became the second company globally to surpass the $4 trillion threshold after NVIDIA, now ranking second on the global market cap leaderboard.

The immediate catalyst for this stock surge was Microsoft's previously announced quarterly earnings, which significantly exceeded market expectations. Notably, its cloud computing business—serving as the core growth driver—delivered particularly outstanding performance. Investors expressed robust confidence in the prospects of Microsoft's artificial intelligence and cloud computing segments.

According to the earnings report, Microsoft's flagship cloud service platform Azure surpassed $75 billion in annual revenue for the recently concluded fiscal year, achieving a substantial year-over-year growth of 34%.

Microsoft's Azure platform offers a suite of powerful AI tools and services, attracting numerous marquee clients, including Meta Platforms (parent company of Facebook) and OpenAI, with its client roster continuing to expand. OpenAI, a key strategic partner of Microsoft, has made significant investments in the Azure platform.

During the earnings call, Microsoft explicitly stated that strong market demand for its AI services is expected to continue materializing through the Azure cloud platform, generating considerable incremental revenue for the company.

“Cloud and AI is the driving force of business transformation across every industry and sector,” Chief Executive Satya Nadella said.

Kim Forrest, Chief Investment Officer of Bokeh Capital Partners LLC, stated, "Like NVIDIA, Microsoft seems to have no substitute."

Following the earnings release, multiple top-tier investment banks swiftly raised their target prices for Microsoft. Morgan Stanley (Morgan Stanley) increased its target price from $530 to $582, while JPMorgan (JPMorgan) followed closely, raising its target price from $475 to $565.