Meta and Microsoft add half a trillion dollars to share price value as AI investment pays off
US tech giants Meta and Microsoft added more than half a trillion dollars in combined value overnight in a major boost for shareholders.
Meta, the owner of Facebook, Whatsapp and Instagram, will see its share price soar more than 11 per cent higher when US stock markets open this afternoon – equivalent to more than $190bn (£143bn) being added to the company value.
For Microsoft, an 8.5 per cent uptick in share price represents around $320bn (£241bn) boost in market capitalisation and puts it in the $4tn category overall – just the second company to ever reach that milestone after chipmaker Nvidia did so recently.
Dan Coatsworth, investment analyst at AJ Bell, said the surge was the sort “most companies can only dream of”. He added: “They’ve smashed market forecasts by a country mile and caused investors to scream with joy.”
The big rises in share price can be attributed to enormous profits and cash generation beating analysts’ expectations – which in turn fuels optimism that even greater profits and growth can be reached in future.
Much of it is to do with cloud computing and utilising or building artificial intelligence products and software, with Meta CEO Mark Zuckerberg saying he wants to offer “personal superintelligence for everyone”.
Meta has spent hundreds of millions of dollars recently hiring a new department, including Scale AI co-founder Alexander Wang, with other AI leaders being offered enormous contracts to join the firm.
“I spent a lot of time building this team this quarter,” Zuckerberg said. “The reason so many people are excited to join is because Meta has all of the ingredients required to build leading models and deliver them to billions of people.
“We’re making all these investments because we have conviction that superintelligence is going to improve every aspect of what we do.”
Microsoft, meanwhile, said its AI tool Copilot had more than 100m users and said they’d be spending even more going forward on software in that arena.
Mr Coatsworth added: “Microsoft’s new implied valuation is $4.13 trillion. It is the second largest company by value on the US market after Nvidia.
“Together, Microsoft and Meta are now worth $5.81 trillion which is roughly twice as much as the entire FTSE 100 index. That’s quite something and goes to show how the UK market’s lack of big technology names has left it trailing behind.”
However, it’s not just the big UK companies which are being outperformed. Mr Coatsworth noted that the US tech scene’s so-called ‘Magnificent Seven’ was now effectively pared back to a quintet – Meta, Microsoft, Nvidia, Amazon and Alphabet.
“It’s time to bid farewell to the Magnificent Seven banner. In share price performance terms, two names have lost their membership to the club as Apple and Tesla have both suffered double-digit share price losses this year. Their underperformance has persisted, which means the Mag7 name is no longer relevant. These stocks are no longer driving the market, so the banner needs refreshing.
“We’re now in the new era of the Famous Five, with Meta and Microsoft doing their best to dethrone Nvidia as the ones delivering the most excitement.”
