Who is the first company with a market value exceeding $4 trillion: NVIDIA or Microsoft?

Driven by the frenzy of AI, the market capitalization of Microsoft and NVIDIA is approaching the $4 trillion mark.

Latest data shows that NVIDIA's market capitalization has reached $3.89 trillion, while Microsoft's market capitalization stands at $3.71 trillion, both nearing $4 trillion.

Over the past three years, NVIDIA has seen its annual sales grow more than tenfold due to a surge in chip demand; in recent years, Microsoft has embedded AI technology into its products through early collaboration with OpenAI, convincing a large number of enterprise and consumer clients to pay a premium for its AI services.

However, Microsoft's AI story is more complex, as its market capitalization surged by $1 trillion in less than three months, leaving very limited room for error in its high valuation. Media analysis indicates that with a market capitalization of $4 trillion, Microsoft's expected price-to-earnings ratio will reach a new high in over 20 years.

NVIDIA: The Tailwind of Chip Dominance and Potential Crisis

NVIDIA's rise has almost entirely relied on the AI boom. As a chip supplier at the upstream of the AI value chain, any company involved in AI almost cannot avoid relying on NVIDIA's hardware support.

In the past three years, its annual sales have surged tenfold, and it is expected to maintain an average annual growth rate of 32% over the next three years. The capital expenditure plans of NVIDIA's major clients also indicate that its chip demand will not plummet in the short term.

However, this "all-in on AI" model also brings binary risks.

If AI demand does not continue as expected, or if other technological breakthroughs weaken the irreplaceability of its chips, NVIDIA could quickly lose its position. For example, in January of this year, the impact of "DeepSeek" caused NVIDIA's market value to evaporate by 20% within a week.

Microsoft: The Complex Game of AI Growth

Microsoft's AI story is even more convoluted. As a tech giant with revenue far exceeding that of NVIDIA, Microsoft is positioned downstream in the AI value chain, and its growth relies on the willingness of enterprises and consumers to pay a premium for AI services.

Analysts estimate that Microsoft's Azure cloud computing division's AI services generated approximately $11.5 billion in revenue in the recently concluded fiscal year, more than doubling year-on-year, but only accounting for 4% of the company's total revenue. This indicates that AI is still a "minor player" in Microsoft's revenue.

The internal operational pressures at Microsoft are also significant. Following the layoff of 6,000 positions in May, Microsoft recently confirmed it will lay off another 9,000 employees.

Although other tech giants are also enhancing efficiency and increasing AI investments through layoffs, Microsoft lags behind most of its large tech peers in terms of average annual revenue per employee, only surpassing Amazon. According to S&P Global Market Intelligence data, Microsoft would need to lay off 84,000 employees to catch up to the efficiency level of Google's parent company Alphabet. At the same time, the partnership between Microsoft and OpenAI has shown signs of a rift.

Previously, OpenAI planned to change its corporate structure to become a traditional for-profit company in order to free itself from being both a beneficiary and a competitor of Microsoft. What worries Microsoft even more is that OpenAI has the right to restrict Microsoft's access to its future technologies upon reaching the vague threshold of "AGI (Artificial General Intelligence)," which could undermine the key driving force of Microsoft's AI strategy.

Wallstreetcn previously mentioned that the $10 billion cooperation agreement signed between OpenAI and Microsoft in 2023 has triggered significant disagreements due to the AGI clause. Microsoft has requested the removal of the key clause in the contract that allows OpenAI to terminate technology licensing upon achieving AGI, but negotiations have remained deadlocked as of May 2025