Microsoft’s stock market valuation crossed the $3 trillion milestone for the first time on Wednesday. By this Microsoft will be retaining its place as the world’s second most valuable company, just behind Apple. For comparison, Microsoft’s market valuation is now larger than the entire GDP of France and just behind that of the United Kingdom.
Microsoft became the second-ever company worth $3 trillion on Wednesday as the artificial intelligence boom sent shares of the company’s stock soaring higher.
Most popular stocks
Microsoft and Apple shares have been vying for the top spot as the most capitalized stock and the most popular stocks on Wall Street since the start of the year. With the iPhone maker, Apple briefly losing its crown to the software giant Microsoft earlier in January.
Microsoft stock hit a record high of $405.63, up 1.7%, enabling it to breach the $3 trillion market valuation level. But it later closed at $402.56, bringing Microsoft market valuation at $2.99 trillion, just below the threshold price of $403.65 that would have kept it above $3 trillion.
Apple’s shares pared earlier gains and closed down 0.35% at $194.50, giving it a market value of $3 trillion, according to LSEG data.
Microsoft’s market dominance
Backed by its investment in ChatGPT maker OpenAI, Microsoft is widely seen as a frontrunner in the race for market dominance in the rollout of generative artificial intelligence (AI) among other tech heavyweights, including Google owner Alphabet, Amazon.com, Oracle, and Facebook owner Meta Platforms.
Using OpenAI’s technology, Microsoft has rolled out newer versions of its flagship productivity software products as well as its Bing search engine, which is expected to better compete with Google’s dominant search offering.
Apple’s falling demand
Apple, on the other hand, is facing slowing demand for its iPhones, particularly in China, where the company is offering customers rare discounts to boost sales amid stiff competition from homegrown rivals such as Huawei Technologies.
“I think it’s AI optimism for Microsoft,” said Stifel analyst Brad Reback, adding that Apple doesn’t seem to have the same “clear AI story” coupled with concerns about iPhone sales growth rates and penetration.
Microsoft target
In a note on Tuesday, Morgan Stanley analysts said they see Microsoft’s play for AI “getting even stronger,” and moved their price target for the stock to $450 from $415. Bank of America analysts also moved their target to $450 per share, predicting more growth for the Washington-based company this quarter.
The 54 analysts covering Microsoft’s stock have a median price target of $425, up from $415 a month ago, and their average recommendation is “buy”, according to LSEG data.
Buoyed by AI optimism, Microsoft stocks gained nearly 57% in 2023 and are up 7% this year. Apple’s stock rose by 48% last year and is up about 1% year-to-date.
Magnificent 7
After trailing behind Apple for the majority of the past decade, Microsoft surpassed the company to briefly become the world’s most valuable publicly traded company earlier in January.
Microsoft is part of the so-called “Magnificent 7,” a group of stocks including Apple, Nvidia, Amazon, Alphabet, Meta and Tesla that have almost single-handedly boosted markets to new highs in recent weeks.
Wall Street’s run-up to record highs will be put to the test in the coming weeks as megacap U.S. technology-related companies begin reporting results.
