Microsoft Corp. has reached an immense milestone with a market valuation surpassing $3 trillion, showcasing the relentless surge of optimism around artificial intelligence driving the software giant’s growth. The stock experienced a 1.7% increase, reaching $405.63, elevating its market capitalization to just above $3 trillion during trading hours. Despite closing up 0.9% at a record high, the valuation remained at $2.99 trillion.
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While Microsoft briefly surpassed Apple Inc., the first company to achieve a $3 trillion valuation last year, it ended below Apple’s market valuation of $3.01 trillion. The momentary breach of the $3 trillion mark solidifies Microsoft’s position as one of the largest publicly traded stocks.
The surge in Microsoft’s market value is attributed to the increasing focus on generative artificial intelligence. Microsoft holds a significant advantage in this domain, offering a range of AI-supported services. Ted Mortonson, technology desk sector strategist at Baird, emphasized Microsoft’s strong position, stating, “To see a company of this size with this kind of growth is pretty amazing, and I think that so long as we continue to see this kind of growth, the stock will continue to rip.”
Microsoft, based in Redmond, Washington, is part of the Magnificent 7, contributing to the market’s significant gains in 2023, with a notable 57% increase. The positive momentum continued into the current year, outperforming the Nasdaq 100 Index with a 7.1% rise. Microsoft holds a 7.25% share of the S&P 500 Index.
Investor enthusiasm for AI, particularly Microsoft’s partnership with OpenAI Inc., has fueled the company’s growth. Microsoft’s AI-supported services, including its engagement with chatGPT through subscriptions, have positioned it as a leading model in the monetization of generative AI.
The demand for AI services, coupled with cloud computing support, is anticipated to drive Microsoft’s long-term growth. Analysts project a 15% increase in revenue for Microsoft’s 2024 fiscal year, surpassing the overall tech sector growth rate.
Microsoft’s popularity on Wall Street is evident, with over 90% of analysts tracked by Bloomberg recommending buying shares. The average analyst price target indicates a potential upside of around 7% from current levels. Microsoft is set to report its second-quarter results later this month, providing further insights into its robust performance and growth trajectory.
