IT Spending Boom Benefiting Tech Stock Giants Across The Globe

A surge in global IT spending is poised to propel the technology industry forward. According to forecasts, global IT expenditures will climb to a staggering $5.08 trillion in 2024.

This 8% rise from the previous year can be largely attributed to the widespread adoption of Software as a Service (SaaS) and cloud-based solutions, as well as cutting-edge technologies like blockchain, the Internet of Things (IoT), artificial intelligence (AI), machine learning, and 5G.

In this expansive market, two tech stock leviathans eye each other from across the Pacific: Microsoft Corporation (MSFT) and Tencent Holdings Limited (TCEHY).

Microsoft, the American giant, currently boasts a market capitalisation of $3.16 trillion, with its stock witnessing a substantial 32.43% growth over the past 12 months, culminating in a share price of $425.34 at last close. Chinese counterpart Tencent, with a market cap of $481.148 billion, has seen its shares surge by 19.73% in the last month, closing at $51.08 in the latest trading session.

Setting its sights on further growth, Microsoft has announced significant investments totaling $3.3 billion in cloud computing and AI infrastructure. These commitments include the establishment of an AI co-innovation lab and a skilling initiative expected to stimulate economic activity and boost job creation in Southeast Wisconsin.

Financial results for MSFT reflect the powerful impact of these investments. With a 17% year-over-year increase, the company's total revenue climbed to $61.86 billion in the third quarter ending March 31, 2024. Their operating income soared by 23% to reach $27.60 billion, underlining the effective financial management of the tech titan.

On the other side of the rivalry, Tencent bears watching as well. Analysts are bullish on the Chinese conglomerate, predicting a 9.2% revenue growth year-over-year to $22.32 billion for the second quarter of 2024. The earnings-per-share (EPS) is equally promising, projected to escalate by 34% to $0.71 for the same period.

Whilst many have been trying to draw lines between US and Chinese tech, there is a case that global investment expansion in the IT sector will be a rising tide to float all boats. There are many more global names in tech besides the two here, and after a year of 34.83% growth in the tech heavy Nasdaq100, you could be forgiven for thinking that any name will do but you always need to conduct prudent due diligence on the viability of any company you are considering.

Both Microsoft and Tencent have been mainstays of the global tech industry in their respective markets for many years, and have been through the peaks and troughs that many growth names still have to come. The life cycle of a company is an interesting thing, and at times there are more similarities than differences, wherever in the world you are.