The $4 trillion club is yet to be established, but there are three candidates with a realistic chance of becoming the founding member:

• Microsoft (MSFT -0.33%): Currently valued at $3.2 trillion.
• Apple: Currently valued at $3 trillion.
• Nvidia: Currently valued at $2.8 trillion.

Microsoft is the closest to the mark, and its business is also growing much faster than Apple's business, thanks primarily to the strength of its Azure cloud platform. Nvidia might be much further away from a $4 trillion valuation, but it could legitimately achieve the milestone before Microsoft and Apple because of how quickly its artificial intelligence (AI) chips for data centers are selling.

While we don't know which company will get there first, I think Microsoft has the greatest potential to not only join the $4 trillion club in the future, but stay there as well. Here's why.

Image source: Getty Images.

Copilot demand is soaring

Since 2019, Microsoft invested around $14 billion in OpenAI, which is the leading AI start-up behind ChatGPT. Microsoft combined OpenAI's latest AI models with its own to create the Copilot virtual assistant, which is now integrated into the company's flagship software products like Windows, Bing, and Edge, for free.

But Copilot is also available for subscribers of the 365 productivity suite (which includes applications like Word, Excel, and PowerPoint) for an additional monthly fee. Organizations around the world pay for over 400 million 365 licenses for their employees, and all of them are eligible for the Copilot upgrade, so the virtual assistant could be a major source of recurring revenue for Microsoft in the future.

During its fiscal 2025 third quarter (ended March 31), Microsoft said there were hundreds of thousands of organizations using Copilot for 365 around the world, which was up threefold from the year-ago period. CEO Satya Nadella said a record number of customers opted to buy more licenses during the quarter, and he said deal size continues to grow.

The company rolled out new Copilot features during Q3 to encourage more 365 subscribers to upgrade, including deep reasoning agents called Researcher and Analyst. Researcher scans internal data and the internet to help employees develop business strategies and create reports, whereas Analyst can turn raw spreadsheet data into demand forecasts and revenue projections. These tools have the potential to save employees hours of manual work, taking their productivity to new levels.

Azure revenue just reaccelerated thanks to AI

Azure is Microsoft's cloud computing platform, which offers businesses hundreds of solutions to help them transition into the digital age. But it also became a go-to destination for businesses seeking the computing power and ready-made large language models (LLMs) they need to create and deploy AI software.

Microsoft accounts for its AI cloud revenue under its Azure AI segment, and it's becoming an increasingly important driver of Azure's overall growth.

During the fiscal 2025 third quarter, Azure revenue grew by 33% year over year, and Azure AI accounted for a record-high 16 percentage points (almost half) of that figure.

Microsoft is rapidly building more infrastructure and buying truckloads of AI chips from leading suppliers like Nvidia in order to meet demand. The company opened new data centers in 10 countries in the third quarter alone, but it has a long way to go. In fact, Chief Financial Officer Amy Hood said Microsoft has an order backlog worth an eye-popping $315 billion from customers who need more computing capacity.

In other words, Azure AI revenue has a very long runway for growth -- but capturing it won't be cheap. Microsoft allocated $21.4 billion to capital expenditures (capex) during the third quarter, most of which went toward data center infrastructure. It places the company on track to spend over $80 billion for the full fiscal year, and Nadella says that figure is likely to grow in fiscal 2026.

Microsoft has a clear path to the $4 trillion club

Microsoft stock is trading at a price-to-earnings (P/E) ratio of 33.6 as of this writing, which is almost exactly in line with its 10-year average. Moreover, it's sitting roughly between Apple stock, which trades at a P/E ratio of 31.9, and Nvidia stock, which trades at a P/E ratio of 38.9. In other words, Microsoft is probably fairly valued at the current level.

MSFT PE Ratio data by YCharts.

If we assume Microsoft's P/E ratio remains constant, the company will have to grow its earnings per share (EPS) by 23.5% to justify a market cap of $4 trillion. Since it grew its EPS by an average of 16.2% per year in the last decade (between fiscal 2014 and fiscal 2024), it could get there in around 18 months from now.

However, Microsoft is growing its EPS below trend at the moment, partly because of its enormous data center spending which is weighing on its profitability. According to Wall Street's consensus estimate (provided by Yahoo! Finance), the company could increase its earnings by 12.8% in fiscal 2026. If it repeats that result in fiscal 2027, then a $4 trillion valuation might be around two years away, despite the elevated capex spending.

Therefore, while it's impossible to know which company will reach the milestone first, I think Microsoft has a great chance to join the $4 trillion club in the near future. Plus, its recurring revenue streams from products like 365 and Copilot, combined with Azure AI's enormous $315 billion customer backlog, could ensure that the company stays there for the long term.