In this brave new world of Apples and (Elon) Musks, Microsoft may not be that cool or sexy, the way it used to be when it populated a world full of Windows. But what it has is an Edge (literally and figuratively) in the zeitgeist of the era, AI, that has seen it within touching distance of reclaiming its old title of being the world’s most valuable company.
Sometime during the Indian night of Friday, August 1 2025, the Washington (the state, not the city)-headquartered tech giant pushed its way into a pretty exclusive club—of companies with a $4 trillion (about Rs 348 lakh crore) in market cap. In fact, only one other company has ever managed to achieve this level of financial dominance, the chipmaker Nvidia.
With Microsoft’s solid technology credentials in enterprise solutions, cloud and AI (it is one of the biggest funders of a once-unknown startup called OpenAI, now of ChatGPT fame), the tech world is now licking its lips at the prospect of the race to breach the $5 trillion mark—will Microsoft pip Nvidia and take the crown?
Some have billed it ‘the most expensive corporate race in history.’
Interestingly, there is a composed calmness at the Satya Nadella-headed firm despite this weekend’s high. For those well-versed with the company’s fortunes, it is almost a 360-degree arc for it, from global highs to disastrous decisions which nearly swept it out of the big league, and a stoic comeback with Hyderabad-born Nadella at the helm in the last decade or so.
The rise: Excel and excess
Bill Gates co-founded Microsoft with Paul Allen, while its meteoric rise in the 1990s, primarily after the dawn of the internet era, was fuelled by the universal adoption of its Windows operating system and office software like Word, Excel and PowerPoint, considering that others like Apple Macintosh and Linux were fringe players at best.
The launch of Windows 95 and Windows XP later on were nothing less than universal events, as Gates became the wealthiest man on earth, mainly due to the Microsoft stocks he held. When the dot-com boom boosted Microsoft’s market capitalisation beyond $600 billion for the first time in December 1999, it was not just a record, but a feat greeted with disbelief.
The company itself shocked the establishment by stealing past the iconic GE (General Electric) to become the most valuable company in the world at that time.
The Fall: Change is the only constant
Of course, success and the excess of hubris also hit the company in myriad ways during this time (Remember Windows Explorer swallowing up its competitor Netscape?), though it would take time before the top suite would realise its missteps.
It was also about to tie into a recurring plot line that the tech world sees playing out again and again—a tech company racing to the top on the sleeves of its breakthrough innovation, but then falling out of step in the face of rapid change. Anyone from Yahoo! to Nokia (some even predict it will be Google’s turn pretty soon) is a testament to the scary scenario.
Microsoft almost went to the brink of that precipice. Bearing heavy on it soon enough was its overwhelming focus on a desktop model of internet access, and the company’s ring-fencing of its proprietary Office suite.
At one stage, it was even spearheading raids on offices, including in India, which it claimed were using counterfeit MS software. Such incidents, plus its dominance of the market as well as Gates’ high-profile image and dubious activism, made it a favourite whipping boy in the popular imagination.
But in a way, its apple cart was upset by Apple and Google. Google not only upended the consumer internet with its search engine algorithm, but its Android operating system (OS) became the most popular OS on mobile devices, with the rest of the market carved out by Apple’s iOS.
Between the two—Google’s Android OS as well as Apple’s iPhones—they managed to kill off Microsoft’s out-of-step moves to transfer the pre-eminence of Windows in desktops onto mobile devices. Both Windows Mobile and Windows Phones came a cropper, with Steve Balmer (Microsoft’s hapless CEO in the period between Gates and Nadella) perhaps perpetually consigned to ignominy by that one viral video clip soon after the iPhone launch, where he ridiculed Apple iPhone for not being business friendly by having no keyboards and for its $500 price tag, quipping, “Who will ever buy such a phone?”
History, and old YouTube videos, can be a wee bit unkind.
Rise again: A new (Azure) dawn
Balmer was replaced by Satya Nadella in 2014, and many credit the Indian with being the go-getter behind Microsoft’s turnaround. However, the truth is a bit more complex than neatly-tied-at-the-ends storylines, since Balmer himself had started out the enterprise focus of the company, realising how a bunch of desktop software weren’t going to help the company in the long run.
Yet, the turnaround came from Microsoft’s resolute look at the future, and the realisation that the quick-changing world of tech is but a revolving door with different dress codes at each entrance. Nadella’s success was in figuring out what was in vogue before it hit the mainstream.
While aiming at businesses with tailor-made solutions, including cloud computing and storage, helped Microsoft gain lost ground (rival Amazon has more business in the cloud storage department, though), what has really propelled it to new heights recently has been its betting on AI.
Not just with investments in the likes of OpenAI, but in the way it has incorporated artificial intelligence into its enterprise stack so seamlessly. Profits are up, the company is now open to the markets and regulators than it ever has been, and much is being made of its future prospects, including the one where analysts are betting on who will cross the threshold into $5 trillion market cap first—present leader Nvidia, or the challenger who has experienced incredible highs and abysmal lows enough to be ready for the long haul.