Shares of the world's biggest software company rose as much as 2.1 percent to $65.64, an all-time high, in early trading, valuing the company at $510.37 billion.
The last time Microsoft was valued more was in March 2000, during the heyday of the dotcom era, when it had a market value of a little above $550 billion, according to Thomson Reuters data.
Despite the gains, Microsoft still lags Apple Inc's market capitalization of about $642 billion and Google-parent Alphabet Inc's market value of a little more than $570 billion.
Microsoft reported second-quarter results on Thursday that beat analysts' average estimate for both revenue and profit, mainly due to its fast-growing cloud computing business.
The company's profit and revenue have now topped Wall Street's expectations in seven of the last eight quarters.
Chief Executive Satya Nadella has been trying to reinvigorate Microsoft since taking over the lumbering giant nearly three years ago, and has helped build more credibility around the company's efforts in areas such as cloud-based services.
