Microsoft set to become second $4T firm after NVIDIA, while cutting jobs

Microsoft Corp. is fast approaching a $4 trillion market capitalisation, positioning itself to become only the second publicly traded company in history to hit that milestone—just behind NVIDIA, which earlier this week became the first to cross that threshold.

As of market close on 17 July 2025, Microsoft’s valuation stood at $3.758 trillion, according to data from Bloomberg and Yahoo Finance. The Redmond, Washington-based tech giant has overtaken Apple ($3.1 trillion) in the market cap race, fuelled largely by investor optimism in its cloud and artificial intelligence (AI) businesses.

NVIDIA, whose valuation currently stands at $4.179 trillion, has benefited from its near-monopoly on AI-capable chips used in data centres worldwide. Microsoft, meanwhile, has gained strength by providing the AI software layer—largely through Azure and its strategic partnership with OpenAI, the maker of ChatGPT.

Together, the two firms represent the dual engines of the AI revolution: NVIDIA with the hardware, and Microsoft with the cloud software infrastructure. According to a June 2025 report by CNBC, Microsoft Azure is now the back-end for AI workloads not just for enterprise clients, but also indirectly for Apple, which is reportedly using Azure and OpenAI models to support its own AI-powered services.

AI and cloud: the growth engines

Microsoft’s investment in AI and cloud infrastructure under CEO Satya Nadella has paid off handsomely. Over the past five years, Microsoft’s stock price has surged more than 250%, driven by robust performance in its Azure platform, its Microsoft 365 productivity suite, and consistent innovation in subscription-based services such as Xbox Game Pass.

This has made Microsoft stock a favourite among institutional investors, particularly due to its steady dividends and aggressive share buyback programmes, which have boosted shareholder returns even during broader market turbulence.

As The Wall Street Journal noted in a recent analyst roundup, Microsoft has successfully diversified its revenue streams across both enterprise and consumer sectors, with cloud revenues now contributing more than 50% of its total income.

The cost of growth: Layoffs and valuation risks

However, Microsoft’s meteoric rise hasn’t come without controversy. Despite record profits and market cap growth, the company has enacted multiple rounds of mass layoffs over the past year. In January 2025, Microsoft cut approximately 9,000 jobs, heavily impacting its gaming and Xbox divisions, according to The Verge and Bloomberg. The layoffs continued through July, as part of what insiders described as “rebalancing to invest in high-growth areas.”

This cost-cutting has raised ethical concerns, particularly as Microsoft continues to post strong earnings and reward shareholders. It has also drawn comparisons with other tech giants who are reshaping their workforces in response to automation and AI adoption. Speaking to CNBC in June, analysts suggested that some of the layoffs were designed to “streamline teams and optimise AI workflows,” not necessarily driven by financial distress.

Microsoft has not publicly disclosed total headcount reductions for the calendar year, though filings with the U.S. Securities and Exchange Commission (SEC) show ongoing restructuring charges.

At the same time, some analysts have begun to voice concern that Microsoft’s stock may be overvalued. In a July 2025 report by Reuters, several equity researchers flagged Microsoft’s price-to-earnings ratio as elevated compared to historical norms, suggesting that any slowdown in AI adoption could lead to a correction.

Microsoft vs. Apple: The AI gap

One of the more striking shifts has been Microsoft’s clear advantage over Apple in the AI race. While Apple remains a formidable consumer tech company, it has struggled to present a compelling AI strategy to the market. Microsoft, by contrast, has taken a platform approach, embedding AI deeply into its ecosystem—from GitHub Copilot to AI-enhanced Office tools—and making Azure the backbone of countless enterprise AI deployments.

A report by Bloomberg Intelligence earlier this month highlighted how Microsoft’s early bets on OpenAI have allowed it to leapfrog Apple in market cap terms—a reversal of positions from just two years ago.

With its current trajectory, Microsoft may cross the $4 trillion threshold in the coming weeks—potentially triggering further investor confidence, but also greater scrutiny over its valuation and employment practices. For now, it remains the only serious contender to NVIDIA’s $4 trillion crown, standing as a case study in how AI and cloud computing have redefined market leadership in tech.