Shares of General Motors at last check jumped 8.3% to $54.10 while Microsoft shares climbed 0.4% to $213.45.
The Redmond, Wash., software giant and Detroit automaker plan to combine their software and hardware engineering experience, cloud-computing capabilities and manufacturing know-how to facilitate expansion of the self-driving-vehicle market.
"Our mission to bring safer, better and more affordable transportation to everyone isn't just a tech race – it's also a trust race," Cruise Chief Executive Dan Ammann said in a statement.
"Microsoft, as the gold standard in the trustworthy democratization of technology, will be a force multiplier for us as we commercialize our fleet of self-driving, all-electric, shared vehicles."
Microsoft is a part of a group of companies that will invest more than $2 billion into Cruise, which now has a valuation of about $30 billion.
Cruise will leverage Microsoft Azure, the company's commercial cloud-computing platform, to commercialize its self-driving vehicle solutions at scale.
Microsoft in turn will tap into the miles driven by Cruise vehicles to facilitate product innovation for transportation companies around through world through Azure.
"Advances in digital technology are redefining every aspect of our work and life, including how we move people and goods," said Microsoft CEO Satya Nadella.
"As Cruise and GM's preferred cloud, we will apply the power of Azure to help them scale and make autonomous transportation mainstream."
In October, Cruise received a permit from the California Department of Motor Vehicles to begin driving tests without a human backup driver present.