Microsoft Net Worth: Garage Startup to Global Tech Giant

Ranked as the third largest company in the world, Microsoft’s net worth is $3.06 trillion. The tech giant has been a pioneer in computing and technology since its launch in 1975, bringing us through the eras of floppy disks, CD-ROMs, Encarta, Internet Explorer, and Clippy the unpopular virtual assistant paperclip.

Now turning its attention to cloud computing and AI, Microsoft is proving its financial resilience in a fast-evolving market.

This article from Business2Community brings you an up-to-date look at Microsoft’s net worth, financial performance, key trends, and recent investments that could shape the business for many years to come.

What is Microsoft’s Net Worth? 

Microsoft’s net worth is $3.06 trillion as of November 2024. This figure, also called market cap, makes Microsoft the third-largest company in the world, and one of only three to have exceeded a $3 trillion valuation.

At the end of April 2024, Microsoft’s net worth of $3.08 trillion made it the largest company in the world by some margin. While the tech giant’s market cap has remained relatively stable, rival Apple has soared from a value of $2.59 trillion to $3.45 trillion. At the same time, semiconductor company Nvidia has rocketed from $2.19 trillion to $3.65 trillion in value, securing it the top spot.

Microsoft’s initial public offering (IPO) took place on March 13, 1986. Shares were priced at $21 but had increased to $35.50 by the end of the day. Approximately 2.5 million shares were sold, raising $61 million for the company.

Microsoft stock climbed over a hundredfold in the decade following its IPO and experienced a further temporary boost from the dotcom bubble in the late 1990s. However, it stagnated during the 2000s and Microsoft’s market cap remained largely between $200 and $300 billion for over a decade.

The appointment of Satya Nadella as CEO in February 2014 brought a much-needed change of direction. Microsoft’s net worth has since risen tenfold from $318 billion, reaching $1 trillion for the first time in April 2019.

Under Nadella’s leadership, the company has turned its focus towards cloud computing and has made several major acquisitions including LinkedIn, Skype, and Activision Blizzard.

It is also investing heavily in OpenAI, the company behind ChatGPT. Its commitment to invest $13 billion in the company has been described by analysts as “some of the best money ever spent”, despite the fact that OpenAI is not expected to turn a profit until 2029.

Microsoft’s 49% equity share with OpenAI equated to a loss of $683 million in Q1 FY25 and is expected to increase to around negative $1.5 billion in Q2. Nadella said in Microsoft’s Q1 earnings call that the company feels “very, very good” about its investment stake and that the partnership has already been “super beneficial” for both sides.

Microsoft’s fiscal year runs from July 1 to June 30 and its annual report is released in late October.

Microsoft Revenue

Microsoft’s revenue for FY24, ending June 30, 2024, was a record $245 billion; an increase of 15.7% from $212 billion in FY23. Operating income for FY24 was $109 billion (44.6%), an impressive 24% year-on-year increase.

Microsoft breaks its revenue down into the following business units:

• Productivity and business processes (Office, LinkedIn, Dynamics): $78 billion
• Intelligent cloud (Azure, Cloud Solutions): $105 billion
• More personal computing (Windows, devices, gaming): $62 billion

Highlights that contributed to Microsoft’s revenue growth in FY24 include:

• A 23% increase in Microsoft Cloud revenue
• A 16% increase in Office 365 Commercial revenue
• A 9% increase in LinkedIn revenue
• Activision Blizzard income moving from third-party to first-party

Looking at the bigger picture, Microsoft has been able to sustain steady growth in recent years by moving to subscription models, becoming a leader in cloud services, and making strategic acquisitions to broaden market reach.

Only once in the past 10 years has Microsoft not recorded an increase in revenue; income decreased from $93.6 billion in 2015 to $91.2 billion in 2016. This shortfall was blamed on an unfavorable foreign currency impact that cost the company an estimated $3.3 billion.

Here is a rundown of Microsoft’s revenue for the past 10 years:

Microsoft has carried out a total of nine stock splits, but the most recent was in 2003. The cumulative multiple from these splits is 288x. Full details are in the table below.

Microsoft conducts quarterly stock buybacks. The board most recently authorized a $60 billion share repurchase program on September 14, 2021. Around $10.3 billion of this amount remained as of June 30, 2024.

The following table shows the last three years of Microsoft’s stock buyback history:

Who Owns Microsoft?

Microsoft is a public company owned by both institutional and individual investors, with institutions holding around 70% of the company’s stocks. Its biggest institutional shareholders are Vanguard Group Inc. with 9.06% of shares, Blackrock Inc. with 7.55%, and State Street Corporation with 3.89%.

Among individual investors, most are insider shareholders, meaning that they have access to non-public information about the company. Satya Nadella, Microsoft’s current CEO, has the highest share, worth over $298 million.The chart below shows the largest insider shareholders of Microsoft, as of June 2024. The current largest insider shareholder is the company’s CEO, Satya Nadella, with 864,327 shares.

Who Founded Microsoft?

Bill Gates and Paul Allen co-founded Microsoft in 1975. When they met, they were both teenagers attending Lakeside School in Seattle. Both computer enthusiasts, Gates and Allen bonded over a teletype terminal their school bought in the ’60s.The photo below shows the duo using the terminal at their school in 1970.

Back in the ’60s, not only were the terminals rare, but they were also expensive to use, at $40 an hour. “The only way for us to get computer time was by exploiting a bug in the system,” said Bill Gates. Although they got caught using the computer for free, this became Gates and Allen’s first business partnership.

Bill Gates started Harvard University in 1973. Two years later, he dropped out to start a company with Paul Allen. At the time, Paul Allen had already dropped out of Washington State University to work as a programmer at Honeywell Inc., which he also quit. They started Microsoft with a simple question in mind:

What if computing was nearly free?

When Gates and Allen started Microsoft, their first project was to create a BASIC interpreter for Altair 8800 microcomputers, distributed by the company MITS. As exhausting as the process was, their success created the world’s first microcomputer software company. They named their company Microsoft, taking the “micro” from microcomputer, and “soft” from software.

Microsoft stocks went public in 1986. Its initial offering price was $21, which went up to $35.50 within the same day. The company raised $61 million by the end of the first day, selling 2.5 million shares. This made the 31-year-old Bill Gates a billionaire.

Growth and Development of Microsoft

Throughout the last five decades, Microsoft launched multiple versions of the Windows operating system, as well as its productivity software products such as Word, Excel, and PowerPoint. It also entered new markets, including video gaming, cloud computing, and artificial intelligence.

Here is a decade-by-decade overview of Microsoft’s product launches, leadership changes, acquisitions, and other developments.

1970s: Early Days of Microsoft

Altair BASIC played a crucial role in Microsoft’s early success from the very beginning in 1975. In the company’s early years, Microsoft worked on refining BASIC and programming in general. By 1978, the company had 12 employees and was based in Albuquerque, New Mexico.

As the company grew, it required more top talent, which was hard to recruit in Albuquerque. This was the main reason why it moved its corporate headquarters to Bellevue, Washington.

1980s: Microsoft Launches MS-DOS and Windows Operating System

Microsoft was incorporated in 1981, with Bill Gates as president and chairman of the board and Paul Allen as executive vice president. This was also the year Microsoft entered the operating systems business, when it built an operating system for IBM’s first personal computer, IBM PC.

To build the IBM PC, Microsoft purchased a standard operating system from a local computer company called 86-DOS. Microsoft later named the operating system MS-DOS (Microsoft Disk Operating System). The IBM PC was an immediate success, making MS-DOS the dominant operating system in the world.

After being diagnosed with Hodgkin’s lymphoma, Paul Allen left Microsoft in 1983. He remained on the board of directors. The same year, Microsoft unveiled Windows, an extension of the MS-DOS operating system providing a graphical operating environment.

In 1984, Microsoft and Apple announced the new Apple Macintosh computer, to be combined with Microsoft’s custom-designed productivity software. The computer would have Multiplan, Chart, File, Microsoft Word, and BASIC.

Finally, in 1985, the company released Windows 1.0. It also launched the first versions of other products, including:

• Microsoft Word for MS-DOS, in 1983
• Microsoft Press in 1983
• Excel for the Macintosh in 1985
• Microsoft Office for the Macintosh, including Word 4.00, Excel 2.20, PowerPoint 2.01, and Mail 1.37 in 1989

Microsoft headquarters moved for the last time in 1986, relocating to Redmond, Washington.

Another event that marked this decade was Microsoft opening up its stocks to the public in 1986. Bill Gates sold $1.6 million in shares and kept a 45 percent stake worth $350 million. Some analysts called it “the deal of the year”.

Thanks to the deal, Bill Gates made it to the cover of FORTUNE Magazine. He was also featured in an eight-page article titled “The Deal That Made Bill Gates, Age 30, $350 Million: The Inside Story of Microsoft’s Stock Issue”.

1990s: Microsoft Upgrades Windows and Develops Internet Explorer

Microsoft launched Windows 3.0 in 1990. Compared to its predecessors, this new version of Windows had a more user-friendly interface.

Windows 3.0 was not the first version of Windows, nor was it the best, but it was the most critical in terms of its ultimate impact

wrote Michael Desmond, editor of Microsoft’s MSDN Magazine at the time. Besides cementing Microsoft’s dominance in the PC industry, Windows 3.0 also helped create a unified look for Microsoft operating systems. This new look would last until the launch of Windows 8 in 2012.

This decade is also known for two other Windows versions, Microsoft Windows 95, launched in 1995, and Windows 98 in 1998. Windows 95 introduced the iconic Start button, recycle bin, and desktop shortcuts. An upgraded version, Windows 98 provided a smoother user experience, with a better graphical user interface.

Windows 95 and 98 came with Internet Explorer, also a Microsoft product launched in 1995. The same year, Bill Gates called the internet a “tidal wave”, noting that it was the biggest development since the IBM PC was introduced in 1981.

2000s: Microsoft Enters the Video Game Console and Cloud Computing Markets

In 2000, Steve Ballmer became Microsoft’s CEO, as Bill Gates transitioned into a technology advisor role. Ballmer had joined Microsoft in 1980, overseeing operations including personnel, finance, and legal areas.

Windows had four important upgrades, Windows 2000 in 2000, Windows XP in 2001, Windows Vista in 2007, and Windows 7 in 2009. The new Windows versions came with changes in user interfaces, taskbar, and networking capacities and each one was a massive upgrade from the previous edition (for the most part).

With the launch of the Xbox in 2001, Microsoft joined the gaming console market. At the time, Sony had launched PlayStation, positioning itself as a leader in home entertainment. In addition to PlayStation, it also had other electronic devices including DVD players, consoles, and audio players which could be a threat to the personal computer.

This led four engineers at Microsoft DirectX to come up with the idea of a Microsoft console as a PlayStation competitor. Xbox was a success – four years after its launch, Microsoft introduced the Xbox 360 with high-definition graphics, an upgraded live version, and a built-in DVD player.

Below is the first episode of a docuseries Xbox produced, explaining how the DirectX engineers convinced Microsoft to enter the gaming console business:

In 2008, Microsoft’s Chief Software Architect Ray Ozzie announced Windows Azure, its cloud computing platform, aiming to enable developers to create applications flexibly.

A year later, in 2009, Microsoft unveiled Bing, its search and decision engine. It initially focused on helping customers with four different areas in their lives:

• Making a purchase
• Planning a trip
• Researching a health condition
• Finding local businesses

2010s: Microsoft Launches Office 365 and Announces a New Strategy

In 2011, Microsoft announced Office 365, a subscription-based model giving access to up-to-date versions of Microsoft Office applications, such as Word, Excel, and PowerPoint. 200,000 organizations had signed up for its beta version in 2010, reporting increased productivity and a 50% decrease in IT costs.

Microsoft also entered the phone and tablet industries, with Windows Phone 7 launching in 2010 and Microsoft Surface launching in 2012. It also took major steps in the entertainment space, enabling Xbox 360 to connect to phones, tablets, and PCs. This way, users could listen to music, play games, and watch movies at any time.

In 2014, Satya Nadella, who had been in the company since 1992, was announced as Microsoft’s third CEO. When he took over, Microsoft‘s share price had been stagnant for years. Fast forward to 2023, the company’s stocks had risen by over 1,000% since 2014, as shown in the chart below.
Nadella made Microsoft what it is today by lasering the company’s focus on its Microsoft Azure’s cloud computing services, diverting its focus away from the Windows operating system. As of 2014, Microsoft had a new strategy: a mobile-first, cloud-first future.

Between 2015 and 2019, Microsoft opened flagship stores in New York City, Sydney, and London. Throughout the decade, it acquired companies like Skype, Yammer, Nokia, LinkedIn, and GitHub.

In late 2019, Microsoft announced a $1 billion investment in OpenAI to create ethical AI systems using Microsoft Azure, signaling that AI would be Microsoft’s next focus.

2020s: Microsoft Continued Investing in AI-Powered Technologies

After making investments in OpenAI between 2019 and 2021, Microsoft confirmed the extension of their partnership into 2023. These investments aimed to accelerate OpenAI’s independent AI research on supercomputing, developing new AI experiences with Azure OpenAI, and remaining OpenAI’s exclusive cloud provider.

In 2023, Microsoft introduced Windows Copilot. An AI assistant, Copilot saves users time, writes answers in various styles and tones of voice, generates images, and summarizes texts.

AI and Copilot were integrated into various Microsoft products and companies:

• GitHub Copilot: An AI pair programmer, GitHub Copilot helps developers with software development and code completion.
• Bing: Powered by Copilot, Bing now has AI features enabling it to give detailed answers, generate images, and simplify complex topics.
• Power Platform: Low-code platforms such as Power BI, Power Apps, Power Automate, and Power Pages save time while cutting costs for companies.
• Microsoft 365: After Office 365 rebranded into Microsoft 365, it started focusing more on cloud services, security, and innovation. This included embracing Copilot and AI technologies.
• Dynamics 365: With the AI-powered applications of Dynamics 365, businesses get to personalize customer experiences, access real-time insights, and improve productivity while reducing costs.

In the 2020s, Microsoft made notable acquisitions in the gaming and AI industries, with the buying of ZeniMax Media, Activision Blizzard, and Nuance. TIME Magazine recognized Microsoft as one of the most influential companies in 2023, highlighting that Satya Nadella’s AI initiatives had paid off.

As of 2023, Microsoft was the second-largest company by market cap. By revenue, it is the largest IT services company worldwide, having generated $161 billion in 2023. Microsoft and the Global IT OutageAt 00.09 EST on July 19, 2024, code was deployed that knocked out global IT systems that were powered by Microsoft. Thousands of flights worldwide were canceled as administrative systems crashed, hospitals across continents couldn’t access patient data, and millions of business users were left without access to their Microsoft services.

The outage wasn’t, in fact, caused by any actions at Microsoft, yet the Blue Screen of Death appearing on many public-facing systems made the company the “face” of the problems. CrowdStrike, a B2B cybersecurity firm, released an update to its Falcon software which was sent to Microsoft. A fix was quickly identified – deleting a file and rebooting – but the costs will be massive as potentially millions of computers running Windows will need to be manually updated.

Company stock declined in premarket trading on the morning of the incident but recovered throughout the day.

What Companies Does Microsoft Own?

Microsoft acquired over 200 companies since incorporating as Microsoft Corporation in 1981. Here are some of its most notable mergers and acquisitions:

History of the Microsoft Logo

Back in 1975, Microsoft’s logo was inspired by the 1970s disco era. This first logo read as Micro Soft, with the words micro and soft written on separate lines.

In 1980, Microsoft changed its logo, placing micro and soft on the same line and adopting a heavy metal-style font. This logo only lasted two years.Microsoft’s 1982 logo was known as the blibbet, due to the blur inside the letter “O”.

Its next logo after the blibbet was “The Pac-Man Logo”, as the blibbet “O” now looked like Pac-Man. This would serve as the company’s logo for the next 25 years from 1987 to 2012.

In 2012, Microsoft added a symbol and some color to its logo. The four colorful squares were aimed at representing the company’s diverse products, from software to mobile phones. It started using the Segoe font in its logo and products, creating a unified look across the company.

The image below shows all the Microsoft logos from 1975, 1980, 1982, 1987, and 2012.

The Future of Microsoft

At the end of the 2023 fiscal year, Microsoft announced its three priority areas for 2023 and the future: cloud, AI, and driving operating leverage.

AI in particular will be a big part of Microsoft’s future, as it continues its partnership with OpenAI. Currently, both Microsoft and OpenAI use Microsoft’s supercomputing technologies and OpenAI’s products such as DALL-E 2 and ChatGPT. These will only increase in the future, as Microsoft is planning to increase investments in supercomputing, develop new AI-powered experiences, and use Azure to power OpenAI’s research and workload.

After the 2023 Microsoft Ignite Conference, Satya Nadella mentioned new AI-related developments in Microsoft Azure and Copilot. He also mentioned that the company is committed to bringing all these experiences to its customers in the “era of AI”. It even announced that it was adding a dedicated “Copilot” AI key to Microsoft keyboards, signaling that its AI assistant isn’t going anywhere soon.

As per the end-of-year report, Microsoft also has further plans in gaming, cybersecurity, the future of work, data platforms, and business software industries.

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