Microsoft briefly surpasses $3Tn market cap, second to do so after Apple

In a remarkable turn of events, Microsoft experienced a historic moment as it briefly achieved a market valuation of $3 trillion on Wednesday.

The surge in Microsoft’s stock price saw an ascent of 1.7% to $405.63 per share during trading hours. This propelled its market capitalization just over the $3 trillion mark, albeit fleetingly. However, as the day concluded, Microsoft’s valuation settled at $2.99 trillion, still a remarkable achievement. This development is historically significant as it solidifies Microsoft’s position as one of the largest public stocks, placing it in the echelon of companies that have breached the $3 trillion valuation threshold. Apple, its formidable rival in the tech sphere, had achieved this milestone last year. Currently, Microsoft’s shares are priced at $402.56 per share. As of Wednesday, Apple is still the world’s most valuable company with a market cap of around $3.01 trillion.

Microsoft’s ascent is part of the broader narrative of the “Magnificent 7,” a term used to describe a group of stocks, including Apple, Nvidia, Amazon, Alphabet, Meta, and Tesla, that have played a pivotal role in driving market highs. Microsoft’s weight in the S&P 500 Index, standing at 7.25%. The company’s stock witnessed a remarkable 57% gain in 2023, outpacing the 7.1% rise in the Nasdaq 100 Index. A crucial factor in Microsoft’s resurgence has been the leadership of Satya Nadella, who assumed the role of CEO in 2014. Nadella’s strategic vision pivoted Microsoft toward cloud computing and solidified key partnerships, including the monumental $10 billion deal with OpenAI in 2019. This foresight positioned Microsoft ahead of competitors in anticipation of the AI revolution.

A key driver behind Microsoft’s monumental growth is the increasing optimism surrounding artificial intelligence (AI) and the company’s long term investment into the now uber-popular OpenAO. The company has strategically positioned itself as a major player in the AI landscape, capitalizing on the transformative potential of these technologies, and we have seen the results in the form of Bard – its AI-powered chatbot – and the integration of generative AI in Microsoft’s tools and services. Analysts point to Microsoft’s offerings in generative AI as a significant contributor to its recent success.

Analysts have responded to Microsoft’s performance with bullish recommendations. Over 90% of analysts tracked by Bloomberg recommend buying Microsoft shares, with a median price target of $425, reflecting a 7% upside from current levels.