Microsoft reached a significant milestone on Wednesday, as its stock market value crossed the $3 trillion mark for the first time. This achievement firms its position as the world’s second most valuable company, closely following Apple.
The ongoing competition between Microsoft and Apple for the top spot in market capitalization has been a notable theme since the beginning of the year. Microsoft briefly overtook Apple earlier in January.
During this recent wave, Microsoft shares reached a record high of $405.63, marking a 1.7% increase and pushing the company beyond the $3 trillion market capitalization. However, by the close of trading, Microsoft’s valuation settled at $2.99 trillion, fearful of the $3 trillion threshold.
In contrast, after initially gaining, Apple’s shares closed down 0.35% at $194.50, maintaining Apple’s market value at $3 trillion, according to data from LSEG. The competition between these tech giants continues to shape the landscape of Wall Street, with Microsoft solidifying its position as a challenging competitor in the market.
Leveraging its investment in OpenAI, the creator of ChatGPT, Microsoft stands out as a frontrunner in the race for market dominance in deploying generative artificial intelligence (AI). This positions Microsoft alongside other tech giants, including Alphabet (Google’s owner), Amazon.com, Oracle, and Meta Platforms (Facebook’s owner).
Using OpenAI’s cutting-edge technology, Microsoft has successfully introduced upgraded versions of its flagship productivity software products. Additionally, the company has enhanced its Bing search engine, poised to offer stronger competition against Google’s widely dominant search offering. Microsoft’s strategic investments in AI technologies underscore its commitment to staying at the forefront of innovation and market leadership in the evolving landscape of artificial intelligence.
On the other hand, Apple is facing slowing demand for its iPhones, particularly in China, where it offers 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” associated with concerns about iPhone sales growth rates and penetration.
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 shares gained nearly 57% in 2023 and are up 7% this year. Apple’s stock rose 48% last year and is up about 1% year-to-date.
