Microsoft Corp.

reported better-than-expected growth in its cloud business, which it says brought in more than US$75 billion in the past year, as the company continues to commercialize

artificial intelligence

services.

It become the second company in the world to reach a US$4 trillion market capitalization after reporting quarterly earnings that beat Wall Street’s expectations, sending the stock soaring in premarket trading Thursday.

Shares of the technology behemoth jumped as much as 8.2 per cent in early trading in New York, pushing its market value to US$4.1 trillion. Nvidia Corp. became the first company to hit the milestone earlier this month.

“Microsoft is getting the recognition that it deserves because it is the operating system for business. All of us run our businesses on Microsoft with Word, with Outlook, with Excel,” said Kim Forrest, chief investment officer at Bokeh Capital Partners LLC. “This quarter’s results point to an even better position for Microsoft because, like Nvidia, there appear to be no substitutes.”

The company’s latest results confirmed that it is a leader in the artificial intelligence boom that has lifted megacap tech stocks, and the broader market, for the past few years.

Microsoft reported better-than-expected growth in its cloud business, and its closely-watched Azure cloud-computing unit posted a 39 per cent rise in sales, handily beating the 34 per cent analysts expected.

On a call with analysts, chief financial officer Amy Hood said Microsoft expects fiscal first quarter capital expenditures at more than US$30 billion, and full year revenue growth in the double digits. In addition, Azure is expected to post a 37 per cent growth rate in the first quarter, above forecasts.

The company said sales at the cloud division grew 34 per cent to more than US$75 billion during the year ended in June, the first time the company has disclosed a revenue figure for Azure, which sells computing power and other services to businesses.

Overall, sales rose 18 per cent to US$76.4 billion during the quarter. Net income was US$3.65 a share. Analysts on average estimated US$73.9 billion in revenue and per-share earnings of US$3.37.

Microsoft in the last few years has deployed AI tools, including those powered by ChatGPT maker OpenAI, across its products, betting that conversant chatbots and more powerful automation tools will boost sales of the company’s productivity software and cloud services.

Investors are welcoming outsized spending on AI infrastructure. Meta Platforms Inc. also lifted the low end of its forecast for 2025 capital expenditures and provided an early steer on 2026 spending.

The stocks are the second and third-best performers among the so-called Magnificent Seven mega tech stocks this year. Since its April 8 trough when President Donald Trump’s sweeping tariff threats spurred a broader market selloff, the stocks surged more than 50 per cent and are trading at record highs.

This year has marked something of a rebound for Microsoft stock. It had lagged its peers in 2024 and the first quarter of 2025, the only Magnificent Seven stock in the red for that period, as investors grew concerned about its AI position and Azure growth.

Wall Street is largely bullish on Microsoft shares, with 68 of the 72 analysts covering the company giving it a buy rating and one giving it a sell, according to data compiled by Bloomberg.

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Microsoft’s shares rose as much as 8.2 per cent to US$555.45 as markets opened on Thursday, a new record high. The company’s stock was up about 22 per cent this year through the Wednesday close.

—With assistance from Carmen Reinicke and Subrat Patnaik.

Bloomberg.com