1/25/2024

Microsoft’s market value reaches $3 trillion

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Key points:

  • The value of Microsoft shares on the stock market for the first time exceeded the $3 trillion mark.
  • Microsoft’s success is largely due to its investments in artificial intelligence technologies.
  • Apple has been slow to invest in AI, which could negatively impact its financial results in the future.

Tech titan Microsoft crossed the $3 trillion mark in market capitalization for the first time on Wednesday, cementing its position as the world’s second most valuable company, just behind Apple.

Microsoft and Apple have been locked in a fierce battle for the top spot on Wall Street since the beginning of the year. In early January, the iPhone maker briefly lost its crown to the software giant, but the momentum has since shifted back in Apple’s favor.

Microsoft shares surged to an all-time high of $405.63, up 1.7%, propelling its market cap past the $3 trillion milestone. However, the price later settled at $402.56, valuing the company at $2.99 trillion. Meanwhile, Apple shares surrendered earlier gains and closed down 0.35% at $194.50, giving it a market value of $3 trillion.

Microsoft’s success lies in artificial intelligence technologies

Microsoft’s investment in ChatGPT developer OpenAI has positioned the tech giant at the forefront of the race to establish dominance in the field of generative artificial intelligence (AI), alongside other industry heavyweights such as Alphabet, Amazon, Oracle, and Meta Platforms.

Leveraging OpenAI’s technology, Microsoft has introduced revamped versions of its flagship productivity software products and upgraded its Bing search engine, which is expected to better challenge Google’s search market dominance.

According to LSEG data, the average price target set by the 54 analysts covering Microsoft stock stands at $425, representing an upward revision from $415 in the previous month.

Driven by optimism surrounding AI, Microsoft shares have witnessed a remarkable ascent, surging by nearly 57% in 2023 and 7% in 2024. Meanwhile, Apple shares have registered gains of 48% last year and about 1% so far this year.

Apple is in no hurry to invest in AI

Apple, in contrast, is encountering a slowdown in demand for its iPhones, particularly in China, where the company is resorting to offering discounts to customers in an attempt to invigorate sales amidst fierce competition from domestic rivals such as Huawei Technologies.

Furthermore, analysts have voiced their apprehensions about Apple’s relative lack of enthusiasm for AI technology development compared to Microsoft. This, along with the sluggish growth of iPhone sales, could potentially contribute to a decline in the company’s stock prices in the future.

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