Wall Street Surges as Microsoft Becomes Second U.S. Company Ever to Hit $4 Trillion Valuation

31 July 2025

Microsoft made headlines on July 31, 2025, as its stock shot up more than 8 percent midday, propelling the company past a $4 trillion market cap. It became the second publicly traded company to reach this milestone, after Nvidia. Investors cheered the company’s strong earnings and robust outlook, sending the S&P 500 and Nasdaq to fresh record highs.

Microsoft reported an 18 percent year-on-year increase in quarterly revenue and exceeded estimates, with its cloud platform Azure growing at a standout rate of 26 percent. Azure’s annual revenue now tops $75 billion. The company also forecast a record $30 billion in capital spending to meet soaring AI demand in the upcoming quarter.

Its multibillion-dollar partnership with OpenAI continues to pay dividends. Microsoft has embedded OpenAI’s advanced models into tools across its ecosystem from Office to Azure and attracted over 100 million users to its Copilot AI-powered products. Investors view this strategic bet as the engine behind its stock performance, which has more than doubled since the debut of ChatGPT in late 2022.

Meta Platforms also posted a sharp rise in its market value, with its stock surging about 12 percent. The company’s strong revenue forecast, underpinned by AI-enhanced advertising performance in Q2, pushed the S&P communication services index to new highs. Alphabet, too, increased its capital expenditure outlook to $85 billion, signaling that Big Tech is doubling down on the AI arms race despite elevated spending.

Even in the face of U.S. tariff tensions, Microsoft’s earnings show resilience. The company has bounced back nearly 50 percent from its April lows as its AI and cloud expansion delivered outsized returns. Trade headwinds have yet to dent its financials materially, bolstering confidence across investor base.

The impressive market moves align with broader optimism that AI investments will outweigh short-term costs. Analysts like Gerrit Smit at Stonehage Fleming emphasize Microsoft’s evolution into a cloud infrastructure powerhouse and its ability to generate consistent profits despite its heavy spending regime. Meanwhile, the Federal Reserve’s recent decision to hold interest rates steady, even amid rising inflation readings, has encouraged equity markets.

Meta’s gains are equally notable. The social media giant exceeded expectations for ad revenue and raised its annual capex guidance. This reinforces belief that its pivot toward AI-enhanced advertising is gaining traction, even as it faces growing competition. Amazon stock also rose roughly 1.7 percent in anticipation of its Q2 earnings later in the day.

Despite these gains, some investors voiced caution over the mounting capital expenditure across Big Tech. Companies collectively are expected to spend in excess of $330 billion on infrastructure, talent, and AI development in 2025. Still, the strong demand outlook and record-setting revenues provide a firm buffer to market anxiety.

At midday, the Dow Jones Industrial Average rose about 89 points, the S&P 500 gained 0.7 percent, and the Nasdaq climbed 1.16 percent. These gains marked the third straight month of growth for U.S. equity benchmarks and reinforced market momentum as rising inflation clouds rate cut expectations.

The strong Q2 earnings season and soaring investor sentiment around AI suggest that Microsoft and its tech peers are key growth engines anchoring markets. Their gains overshadow concerns around tariffs, inflation, and uncertain trade policy, offering a structurally bullish narrative for U.S. equities heading into the fall.