Paul Stenhouse: Microsoft becomes the second $4 trillion company, the further impact of tariffs on Apple

Microsoft becomes the second $4 trillion company  

All fuelled by the increased revenue from the Cloud Computing business, which provides compute for AI services. This is a huge win for Microsoft – the company that was absolutely written off in the mid 2000s and was expected to go the way of Yahoo. Microsoft is still second place to Amazon Web Services in the Cloud category. Their CFO announced they'll spend $30 billion on its AI infrastructure investments in the next quarter.  

Apple was the first US company to hit $1 trillion in 2018, first to hit $2 trillion in 2020, first to hit $3 trillion in 2022, so by that math, it should have hit $4 trillion in 2024, but Nvidia beat them. Nvidia only became a $1 trillion company in 2023 – two years ago!  

For context, $4 trillion would be like giving all 5.3 million New Zealanders USD $750,000 (NZD $1.2 million). 

Apple says Trump’s tariffs will cost it another $1 billion  

That's on top of the $800 million the tech giant spent on tariffs during the June quarter. Quarterly revenue jumped 10% to $94 billion between April and June. Apple moved a chunk of iPhone production to India to avoid some of the China tariffs, but President Donald Trump is threatening 25% tariffs on Apple if it doesn't start producing more in the USA.   

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Episode Transcript

Speaker 1 (00:07):
You're listening to the Saturday Morning with Jack team podcast
from News Talks at b.

Speaker 2 (00:12):
Well, Microsoft has become the second company in the world
to pass the auspicious mark of having or of being
worth more than four trillion dollars. So more than four
thousand billion US dollars. You can you can say, well,
of course Microsoft was always going to get there, But

(00:33):
if you think about it, Microsoft has had a little
bit of a rough period. It looked like Apple was
the darling for a long time, but actually Microsoft has
leapfrogged Apple. Now here with the details is our texpert
Paul stenhousecal to Paul.

Speaker 3 (00:47):
Yeah, good morning, And guess what, Jack, You just can't
guess what has pushed this company to four trillion dollars?
Can you?

Speaker 2 (00:54):
Could it have anything to do with I don't know, AI?
Paul something?

Speaker 3 (01:01):
Yeah, No, it's it's interesting because the you know, all
of these companies have gone into the cloud computing business,
and it's the cloud computing business for Microsoft that has
really feeled them. They had a standout quarter which really
pushed them over that four trillion dollar market cap. All
we cause this cloud computing provides compute services now for

(01:23):
AI that has just an hot, hot, hot demand. But
you know, you think of the time period where Google
was really sort of on the up. They'd started to
get into that desktop software type market where Microsoft was.
They started to create Google Docs, which took over from
Microsoft Word, and sheets that took over from Excel, and

(01:46):
people were sort of saying, you can't collaborate on Office.
It's dead. Microsoft is done. You know, Windows computers kind
of fell out of favor a little bit. Apple took
on this, you know, this this world of interconnectivity between
your MacBook and your iPhone. People were very excited about
all of that, and they thought maybe it was just
going to go the way of Yahoo and just sort

(02:07):
of fade off. But man, they have absolutely turned that
business around, and they now in that big cloud category
amongst the many categories they are in, but they are
now just second to aws in that cloud category. And
it's they're not going to stop spending because they see
a fosted on the earnings call. They're going to spend

(02:27):
thirty billion dollars on AI infrastructure in the next quarter.
So in the next three months.

Speaker 2 (02:35):
Ten billion dollars a ten dollar dollars a month, So
what two and a half billion dollars a week at
the moment.

Speaker 3 (02:42):
Wild, isn't it? So? Can I give you another number?
Because I think I think sometimes we forget just how
big some of these numbers are. So four trillion US dollars, okay,
would be like giving all five point three million New
Zealanders three quarters of a million US dollars, which would
be one point three million New Zealand dollars. Can you imagine,

(03:06):
like there is people forget You're like, oh, you know,
you know, four trillion, it's just one bigger than three
point nine. No, these are big numbers we're talking about here, people,
and it's just and it's accelerating, right. First US company
to hit one trillion was in twenty eighteen was Apple. Second, sorry,
first to hit two trillion was in twenty twenty. First

(03:28):
to hit three trillion was twenty twenty two, also Apple.
So by that math, they really should have hit four
trillion in twenty twenty four, but they didn't.

Speaker 2 (03:37):
Okay. The absolute back of the envelope sums from me
is that it's about it's worth about eighteen times our
annual GDP. It's just ridiculous, isn't it. It's just absolutely ridiculous, Meanwhile,
Apple is not only slip behind Microsoft in terms of
in terms of the valuation of the company, but they've

(03:58):
announced that the tariffs are going to cost them another
billion dollars.

Speaker 3 (04:02):
Yep. Note the word they're another billion dollars, because that's
on top of the hundred million dollars they've already eaten. Right,
they've just taken on this tariff cost, and that was
just during the June quarter. So they're going to spend
close to two billion bucks probably this year on tariffs,
which is just crazy. But I mean, look, look rounding
eras I guess in some ways Jack, because their quarterly

(04:23):
revenue jumped ten percent, ninety four billion dollars they pulled
in between April and June, and I've been trying to
really get around some of this tariff stuff. We talked
about how they charted a plane and just planes and
just sent iPhones, you know, like to the United States
as fast as they possibly could. They've tried to move
a bunch of their iPhone production to India to move

(04:46):
to get away from some of the China tariffs. But
Donald Trump is threatening them that if they don't start
producing phones products in the United States, he could be
slapping them with a twenty five percent tariff. So I
guess that's probably why they just decided to eat close
to two billion dollars in tariffs, because if they had
passed on to consumers, I have a feeling his eyes
may have turn the direction.

Speaker 2 (05:07):
Yeah that's crazy. Hey, thank you so much, Paul, really
appreciate your time. As always, our TEXTB Paul Stenhouse there.

Speaker 1 (05:14):
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