Microsoft hits $4tn market value as tech stocks rise to new highs
Meta shares rise 12% on back of blockbuster earnings
Emily Herbert and Ian Smith in London
Microsoft hit $4tn in market capitalisation on Thursday in a US tech share surge that also pushed Meta stock up by 12 per cent, on the back of blockbuster earnings the previous day.
The Nasdaq Composite rose 1.3 per cent to a new record after the opening bell.
The blue-chip S&P 500 index rose 0.8 per cent, despite a hawkish Federal Reserve meeting that left the index more downbeat at the end of Wednesday.
The runaway earnings from Microsoft and Meta, which came after Wednesday’s close, have allowed investors to shrug off worries about US growth and warnings of a stock market bubble.
Microsoft climbed 6.4 per cent in early trading, making it the second company to hit the $4tn milestone after Nvidia earlier in July.
Since Nvidia passed the mark on July 9, its market value has risen by another $400bn.
The bumper results have “reignited the hype around AI investment”, said Deutsche Bank analysts.
Some investors have been warning that the US stock market is approaching a bubble, with stock prices relative to sales volumes at all-time highs.
But the strong earnings will allay some of those fears.
“The only way to justify current US stock valuations is to get upside surprises on earnings, and that’s exactly what these strong tech results are offering,” said Arun Sai, senior multi-asset strategist at Pictet Asset Management.
US tech stocks have roared back after falling sharply when Donald Trump’s so-called reciprocal tariffs shook markets in April, and have broken well above the record highs set before “liberation day”.
The record equity prices come in spite of Friday’s August 1 deadline for the implementation of the US president’s global trade levies, which will push the average rate of US import taxes on foreign goods to its highest since before the second world war.
Despite the continued uncertainty, the dominance of US companies in AI has fuelled a remarkable rally in stocks since the April lows.
“Holdings in the megacap US consumer tech and AI stocks are our biggest exposures, and are central to portfolio returns,” said Iain Barnes, chief investment officer at wealth manager Netwealth.
He pointed to “their phenomenal ability to generate profitability and strong earnings growth”.
Analysts at BlackRock said they maintained their overweight recommendation on US stocks because of the AI theme, while acknowledging that policy uncertainty is weighing on economic growth.
“US equities will regain global leadership as the AI theme keeps providing near-term earnings support,” they said.
US stocks gave up some gains on Wednesday after Fed chair Jay Powell struck a hawkish tone at the central bank’s interest rate-setting meeting, signalling that the central bank could hold rates steady for longer than some investors had expected.
The Fed meeting came after new data showed that the US economy had grown at 3 per cent in the second quarter, above expectations, while also showing signs of slowing underlying growth.
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