Microsoft becomes second company to surpass $4 trillion in market value
Microsoft, which is traded under the ticker 'MSFT', is continuing to surge and as of noon in New York City (16:00 GMT) on Thursday, it is up 4.6 percent from the market open.
The technology behemoth said it will spend $30bn in capital spending for the first quarter of the current fiscal year to meet soaring artificial intelligence (AI) demand. Microsoft also reported booming sales in its Azure cloud computing business on Wednesday.
'It is in the process of becoming more of a cloud infrastructure business and a leader in enterprise AI, doing so very profitably and cash generatively despite the heavy AI capital expenditures,' said Gerrit Smit, lead portfolio manager, Stonehage Fleming Global Best Ideas Equity Fund.
Redmond, Washington-headquartered Microsoft first cracked the $1 trillion mark in April 2019.
Its move to $3 trillion was more measured than that of technology giants Nvidia and Apple, with AI-bellwether Nvidia tripling its value in just about a year and clinching the $4 trillion milestone before any other company on July 9.
In its earnings report, revenue topped $76.4bn.
'Slam-dunk'
'This was a slam-dunk quarter for MSFT [Microsoft] with cloud and AI driving significant business transformation across every sector and industry as the company continues to capitalize on the AI Revolution unfolding front and center,' Dan Ives, senior analyst at Wedbush Securities, said in a note provided to Al Jazeera.
Microsoft's multibillion-dollar bet on OpenAI is proving to be a game-changer, powering its Office Suite and Azure offerings with cutting-edge AI and fuelling the stock to more than double its value since ChatGPT's late-2022 debut.
Its capital expenditure forecast, its largest ever for a single quarter, has put it on track to potentially outspend its rivals over the next year.
'We closed out the fiscal year with a strong quarter, highlighted by Microsoft Cloud revenue reaching $46.7bn, up 27 percent [up 25 percent in constant currency] year-over-year,' Amy Hood, executive vice president and chief financial officer of Microsoft, said in a statement.
However, Microsoft's surge in market value is overshadowed by a wave of layoffs at the tech giant. Earlier this month, the company laid off 9,000 people, representing 4 percent of its global workforce, while doubling down on AI.
Lately, breakthroughs in trade talks between the United States and its trading partners ahead of US President Donald Trump's August 1 tariff deadline have buoyed stocks, propelling the S&P 500 and the Nasdaq to record highs.
Meta Platforms also doubled down on its AI ambitions, forecasting third-quarter revenue that blew past Wall Street estimates as artificial intelligence supercharged its core advertising business.
The social media giant upped the lower end of its annual capital spending by $2bn – just days after Alphabet made a similar move – signalling that Silicon Valley's race to dominate the artificial-intelligence frontier is only accelerating.
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Qatar Tribune
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India poised to lead with world's largest AI-ready school population
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Al Jazeera
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The US gross domestic product (GDP) at about $30.3 trillion accounts for more than one-quarter of the global economy. China's estimated GDP is about two-thirds that amount. US government data on trade, employment, consumer spending and GDP are considered important signals for the direction of the global economy and are closely followed by businesses and investors from London to Dubai and Tokyo. Many countries, including democratic states, have faced accusations of fiddling with economic statistics for political reasons, often with serious reputational consequences. In 2010, the European Commission published a withering report accusing Greece of deliberately falsifying data to conceal the poor state of its public finances. In 2013, the International Monetary Fund officially censured Argentina for providing what it said was inaccurate data on inflation and economic growth. 'Economic data manipulation' Some research suggests that countries run by strong-arm leaders are especially prone to misrepresenting the state of their economies. A 2024 study published in the European Journal of Political Economy found that economic openness and democracy decreased the likelihood of governments manipulating statistics although there were no observable positive effects from media freedom or the independence of the statistical office. In a 2022 paper that used satellite imagery of nighttime light as a proxy for economic development, Luis Martinez, a professor at the University of Chicago, estimated that autocratic countries artificially inflated their annual GDP growth by about 35 percent. 'Economic data manipulation is pervasive in history, especially in autocracies and dictatorships to create narratives for the people – typically to embellish standards of living,' Tomasz Michalski, an associate professor of economics at the HEC Paris business school, told Al Jazeera. 'What is rarer, though, is to find such deliberate behaviour in countries that strive to be democracies or are more developed.' After Trump's firing of McEntarfer, a career economist who was appointed in 2024 with overwhelming bipartisan support, critics were quick to note parallels to tactics attributed to strongman leaders seeking to bolster public approval for their policies. 'It's one more step on our rapid descent into banana republic status,' Nobel Prize-winning economist Paul Krugman said on Substack, a subscription-based newsletter platform. Lawrence Summers, who served as US Treasury secretary under President Bill Clinton, described the firing as the 'stuff of democracies giving way to authoritarianism'. Scott Sumner, a professor of economics at Bentley University in Waltham, Massachusetts, said Trump's move made the US 'look more like a banana republic' although it remained to be seen whether he would seek to directly manipulate the government's economic figures. 'It's actually hard to fool the public, and almost no one was fooled by the Argentina manipulation,' Sumner told Al Jazeera. 'It's too soon to say whether Trump will try to do the same. Any attempt to do so would likely fail.' 'The quality of US economic statistics' The quality of US economic data has been a growing concern for some time due in part to the Trump administration's freeze on hiring federal employees and staff cuts at numerous agencies. In March, Commerce Secretary Howard Lutnick dissolved two expert committees that advised the government on its economic statistics, prompting concern among some economists. In June, the Bureau of Labor Statistics (BLS) announced that it had stopped collecting price-related data in three US cities – Buffalo, New York; Lincoln, Nebraska; and Provo, Utah – due to limitations in 'current resources'. But even before Trump's return to the White House in January, declining response rates to surveys among the public in recent years had made the collection of data increasingly difficult, raising concerns about accuracy. In a poll published by the Reuters news agency last month, 89 of 100 policy experts surveyed said they had at least some concerns about the quality of US economic statistics. 'Some data is just unreliable because people stopped responding to surveys or the responses became so biased given the nonhomogeneous response rates,' said Michalski, the HEC Paris associate professor. 'There are no easy remedies often for improving data collection given that many people are not using landlines, are unreachable or provide careless answers to investigators,' he said. Even with sound methodology, data are always at risk of manipulation once politicians get involved, Michalski added. 'Even with correct numbers, it is possible to spin a story about inflation or GDP growth by changing the base years or selecting some specific periods to weave narratives,' he said. 'The incentives to manipulate and falsify are clearly there. There is little or no punishment.' Groshen said that while she does not expect US economic data to stop being reliable in the immediate future, 'we seem headed in that direction.' 'For now, the BLS will continue to operate as it has before,' she said. 'We will need to start worrying if and when the president's people are embedded there.'
