Microsoft Surpasses $3 Trillion Valuation, Riding High on AI Enthusiasm

In a historic moment on Wednesday, Microsoft became the second company ever to reach a staggering valuation of over $3 trillion, propelled by the ongoing artificial intelligence boom that propelled its stock to new heights.

Surging by nearly 1.5% to approximately $405 per share, Microsoft’s market capitalization exceeded $3 trillion, following in the footsteps of Apple as the only other company to achieve this monumental milestone. To put this into perspective, Microsoft’s current market value now surpasses the entire GDP of France and closely trails that of the United Kingdom.

The tech giant’s shares have experienced a remarkable rise of over 7% year-to-date, building on a 40% surge the previous year. Investor enthusiasm in artificial intelligence and its potential for driving growth has been a significant driver of this upward trajectory.

Microsoft’s CEO, Satya Nadella, made substantial investments in AI in 2023, including commercializing and integrating AI tools like ChatGPT into the company’s suite of products, placing Microsoft at the forefront of AI innovation compared to its competitors.

The company’s strategic moves in the AI landscape were further solidified through strengthened ties with OpenAI, the creator of ChatGPT, a key player in the field of artificial intelligence. Microsoft’s ascent to become the world’s most valuable publicly traded company earlier this January marked a noteworthy reversal of its trailing position behind Apple over the past decade.

Part of the influential “Magnificent 7” stocks, Microsoft, along with Apple, Nvidia, Amazon, Alphabet, Meta, and Tesla, has played a pivotal role in driving markets to record highs in recent weeks. Microsoft alone constitutes 7.3% of the S&P 500, and collectively, these seven stocks boast a market cap larger than the entire stock market of any country except for the United States.

Notably, Nvidia and Microsoft contributed to around 75% of the S&P 500’s gain this year as of last week, as reported by analysts at Bespoke Investment Group. Analysts from Morgan Stanley and Bank of America have both revised their price targets for Microsoft to $450 per share, anticipating further growth in the upcoming quarter.

Investors keenly await Microsoft’s fourth-quarter earnings report, scheduled for January 30, to gain insights into the company’s continued financial performance amid its remarkable valuation ascent.