Shares Surge 8% on Earnings Surprise
Microsoft Touches $4 Trillion Market Cap After Nvidia
Apple Achieves Highest Q2 Revenue Since 2021
Microsoft (MS) has become the second company, following Nvidia, to join the $4 trillion market capitalization club. This achievement is attributed to the company's successful AI- and cloud-focused business strategy, as well as a strong earnings surprise that fueled a sharp rise in its stock price.
According to CNBC on July 31 (local time), MS shares surged as much as 8.2% during intraday trading, reaching $555.45 per share. As a result, the company's market capitalization surpassed $4.1 trillion for the first time in history. With this, MS became the second company in the world, after Nvidia, to exceed a $4 trillion market cap. However, as the stock price later declined, the company relinquished its $4 trillion market cap title.
It took MS 50 years to cross the $4 trillion market cap threshold since Bill Gates and Paul Allen founded the company in 1975. After surpassing a $3 trillion market cap in January last year, MS added another $1 trillion in just 1 year and 6 months, ushering in the $4 trillion era.
The sharp rise in market cap was driven by an earnings surprise that exceeded market expectations. In its second-quarter results announced the previous day, MS reported total revenue of $76.44 billion, up 18% year-on-year, and earnings per share of $3.65, both surpassing market forecasts. Notably, the core Azure cloud business grew by 39%, significantly outpacing market expectations of 34% growth.
U.S. investment media outlet Barron's interpreted the results as "further confirming MS's overwhelming position in the AI sector and demonstrating the growing influence of big tech companies on both financial markets and the real economy."
Global investment banks (IBs) predicted that MS shares would continue to rise. Bernstein and Bank of America (BofA) set target prices for MS at $637 and $640, respectively. These targets are about 15% higher than the all-time high of $555.45 recorded during intraday trading.
Apple also exceeded Wall Street expectations in its second-quarter (April to June) results this year, posting its largest quarterly revenue increase since 2021. In its earnings announcement, Apple reported revenue of $94.04 billion (about 130 trillion won), a 10% increase year-on-year. Earnings per share (EPS) were $1.57, while revenue from the iPhone segment, which drives overall sales, surged 13% to $44.58 billion, surpassing both Wall Street's revenue estimate of $89.53 billion and EPS estimate of $1.43.
This strong performance is largely attributed to consumers purchasing products in advance due to concerns about iPhone price increases resulting from tariff burdens. Tim Cook, Apple's CEO, said in an interview with CNBC, "By any measure, it was an exceptional quarter," and explained that about 1 percentage point of the revenue growth rate was due to advance purchases by consumers concerned about future tariffs. After the earnings announcement, Apple's stock closed down 0.71% in regular trading but rose by more than 2% in after-hours trading.
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