The U.S. equity market rebounded following April’s tariff shocks, fueled by strong earnings reports and reduced geopolitical tensions. Notably, Nvidia (NASDAQ: NVDA) has seen substantial growth, primarily driven by demand for GPUs.
Microsoft (NASDAQ: MSFT) is also enhancing its position, leveraging artificial intelligence (AI) across multiple sectors. The company reported third-quarter fiscal 2025 results showing a 33% year-over-year increase in Azure and cloud services revenue, with AI services contributing significantly to this growth. Microsoft processed over 100 trillion tokens in the same quarter, a fivefold increase year-over-year, and maintains a remaining performance obligation (RPO) of $315 billion, reflecting a 34% year-over-year increase.
Microsoft currently trades at 26.2 times forward earnings, below its five-year average of 33.2, suggesting potential investment appeal despite a premium valuation. The company has also increased its cash flow from operations by 16% year-over-year to $37 billion and maintained a cash balance of $79.6 billion, emphasizing strong financial flexibility.
