Microsoft has joined the exclusive $4 trillion club after reporting a blowout fourth-quarter earnings report, causing its shares to surge over 9% in after-hours trading. Nvidia now joins the tech giant as the sole two company that has crossed the $4 trillion market capitalization threshold.
The firm posted fourth-quarter revenue of $76.4 billion and earnings per share of $3.65, far exceeding Wall Street expectations. Bloomberg reported that Wall Street had expected $73.89 billion in revenue and $3.37 a share in earnings.
This beat on earnings indicates strong performance in key areas, particularly cloud services and AI, two areas of growth that continue to move Microsoft ahead in the competitive technology sector.
AI and Cloud Fuel Growth
“Cloud and AI are the engine of business transformation in every industry and sector,” added CEO Satya Nadella in a statement. “We’re inventing across the tech stack to help customers innovate and thrive in this new period, and this year, Azure hit $75 billion in revenue, growing 34 percent, with growth across all workloads.”
For the first time, Microsoft disclosed concrete revenue figures on its Azure cloud computing platform, a change of course for the company’s historically tight-lipped approach. Even former CEO Steve Ballmer had once demanded more transparency into Azure’s finances.
Demand Outpaces Supply
CFO Amy Hood pointed to the strain on infrastructure while demand is surging. “Demand remains higher than supply,” she said, citing the rapid pace at which Microsoft is expanding its global footprint of data centers.
Microsoft will spend $30 billion on capital spending in the next quarter, ahead of analysts’ estimates. The jump occurs as large tech companies, such as Google, accelerate capex spending to remain at the forefront of the AI battle. (Google recently stated that it would invest $85 billion.)
“I feel very good that the spend that we’re making is correlated to basically contracted, on-the-books business that we need to deliver,” Hood added.
As Microsoft keeps innovating in its AI and cloud platform, investors are optimistic about the future of the company amidst what looks like a long-term shift in industries.
