On Wednesday, Microsoft achieved a significant milestone as its stock market value surpassed the $3 trillion mark for the first time, solidifying its position as the world's second most valuable company, closely trailing Apple. The ongoing rivalry between Microsoft and Apple for the top spot in market capitalization has been a notable trend since the beginning of the year, with Microsoft briefly surpassing Apple in January.
Microsoft's shares reached a record high of $405.63, marking a 1.7% increase and pushing its market capitalization over the $3 trillion threshold. Meanwhile, Apple's shares were trading at $195.50, up 0.3%, resulting in a market value of $3.02 trillion, according to data from LSEG.
Fueled by its investment in OpenAI, the creator of ChatGPT, Microsoft is considered a frontrunner in the competition for market dominance in the deployment of generative artificial intelligence (AI). This positions Microsoft alongside other major tech players like Alphabet (Google), Amazon, Oracle, and Meta Platforms (Facebook).
Microsoft has leveraged OpenAI's technology to introduce new versions of its flagship productivity software and enhance its Bing search engine, aiming to compete more effectively with Google's dominant search offering.
In contrast, Apple is grappling with slowing demand for its iPhones, particularly in the Chinese market. The company has responded by offering rare discounts to stimulate sales amid fierce competition from local rivals like Huawei Technologies.
Stifel analyst Brad Reback attributes Microsoft's success to its optimism in the field of AI. He notes that Apple lacks a similarly "clear AI story" and faces concerns regarding iPhone sales growth rates and market penetration.
Analysts covering Microsoft's stock, numbering 54, have a median price target of $425, up from $415 a month ago. Their average recommendation for the stock is "buy," according to LSEG data.
As Wall Street continues its ascent to record highs, the upcoming weeks will test the resilience of mega-cap U.S. technology-related companies as they begin reporting their financial results.
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