The tech giant Microsoft is set to join the $4 trillion club in an extended trading session after Wednesday. With profits beating expectations, Microsoft shares climbed 8% and are set to join chipmaker Nvidia, which hit the milestone earlier this month.
This marks Microsoft’s fastest rate of expansion in over three years. The Azure cloud computing business drives the 18% revenue growth. For the first time, the sales from Microsoft Azure and other cloud services exceeded $75 billion in FY25, a 34% increase from prior years.
Microsoft shares rally
By Wednesday’s close, Microsoft shares had risen 22% so far this year, outperforming the S&P 500’s 8% increase. The company reached an all-time closing high of $513.71 on 25 July, and its stock has since climbed above $553 in after-hours trading.
This also marks Microsoft’s advance over another tech giant, Apple, on the market cap leaderboard. After Nvidia, Microsoft is followed by Apple, whose shares fell by 17% this year with limited innovation in the AI space.
AI giants dominate
The trading session also proved fruitful for Meta with an 11% bump in late hours of Wednesday. This surge is set to ease investor worries, fuel AI investments and give competition to rivals Microsoft and Alphabet’s Google.
Meta has increased the lower end of its annual capital expenditure forecast by $2 billion, now projecting spending between $66 billion and $72 billion. CEO Mark Zuckerberg told analysts that advancements in AI are enabling significant progress in the company’s core advertising business across Facebook and Instagram. Experts predict that Meta is set to spend $120 billion on AI by the end of this fiscal year.
Profits and layoffs
Microsoft hit a record high on mass layoffs earlier this year. Despite the share prices soaring, more than 9,000 employees have been sacked across all roles and teams. Attributing it to AI investments, cost-cutting has also become a prime reason by such job cuts. In a memo released by CEO Satya Nadella, just a day after being called out for increased applications of H-1B visas, he said that there isn’t a major change in headcount. He pointed out the “resilience” of the firm and how the layoffs were a “tough decision”. However, the job cuts are not limited to Microsoft. Other players like Intel, Tata Consultancy Services (TCS) and Amazon are in the list too this year.
