Microsoft has achieved a significant milestone in the financial realm as its stock market value surpassed $3 trillion for the first time on Wednesday. This accomplishment solidifies Microsoft’s position as the second most valuable company globally, closely trailing Apple.
Microsoft and Apple have been engaged in a continuous battle for supremacy as the most capitalised stock on Wall Street throughout the year. In a noteworthy turn of events, Microsoft briefly claimed the top position earlier in January, causing fluctuations in both companies’ stock performances.
Microsoft’s shares reached a record high of $405.63, marking a 1.7% increase, which propelled the company beyond the $3 trillion market capitalization threshold. Meanwhile, Apple’s shares experienced a marginal dip, trading at $194.82, with a market value of $3.01 trillion, according to LSEG data.
Microsoft’s remarkable growth can be attributed to its strategic investment in OpenAI, the creator of ChatGPT. The company is positioned as a frontrunner in the competitive race for market dominance in the deployment of generative artificial intelligence (AI). Competitors in this space include tech giants such as Google’s Alphabet, Amazon.com, Oracle, and Meta Platforms, the parent company of Facebook.
Leveraging OpenAI’s technology, Microsoft has introduced upgraded versions of its flagship productivity software and the Bing search engine. These advancements are poised to enhance Microsoft’s competitiveness, especially against Google’s dominant search offerings.
Conversely, Apple faces challenges with slowing demand for its iPhones, particularly in China. To counter this, the company has resorted to offering rare discounts to stimulate sales amidst intense competition from local rivals like Huawei Technologies.
Stifel analyst Brad Reback attributes Microsoft’s success to “AI optimism,” emphasising the company’s clear narrative in the AI landscape. In contrast, Apple faces concerns about iPhone sales growth rates and market penetration.
Microsoft’s shares have experienced an impressive 57% surge in 2023, followed by a 7.3% increase in the current year. Analysts, with a median price target of $425, express a bullish sentiment towards Microsoft. In comparison, Apple’s stock rose by 48% in the previous year, with a 1.3% uptick in the current year.
As Wall Street anticipates the upcoming earnings reports from major U.S. technology-related companies, Microsoft’s dominance in the AI sector and its consequent financial success underscore the critical role of artificial intelligence in shaping the trajectory of tech giants in the stock market.
