Michelle ThompsonOn Wednesday, Microsoft achieved a historic milestone by becoming the second company ever to reach a valuation of $3 trillion, primarily due to the surge in interest in artificial intelligence (AI), which boosted its stock shares significantly.
To put this achievement into perspective, Microsoft’s market worth now exceeds the entire GDP of France and is just slightly behind that of the United Kingdom. On Wednesday afternoon, the company’s stock increased by nearly 1.5%, reaching around $405 per share, resulting in a market capitalization of over $3 trillion. This achievement places Microsoft in the same league as Apple, the only other company to have reached this remarkable valuation.
In the current year, Microsoft’s shares have appreciated by more than 7%, building upon a substantial 40% increase in the previous year. Much of this growth can be attributed to investor enthusiasm surrounding AI and its potential to drive the company’s expansion.
In 2023, Microsoft’s CEO, Satya Nadella, made a substantial investment in AI, including the integration and deployment of AI tools like ChatGPT in its product suite, outpacing its competitors. Microsoft also strengthened its collaboration with OpenAI, a significant player in the AI field, during a period of change in the smaller company’s leadership.
After trailing behind Apple for much of the last decade, Microsoft briefly became the world’s most valuable publicly traded company in January.
Microsoft is a key member of the “Magnificent 7,” a group of stocks, including Apple, Nvidia, Amazon, Alphabet, Meta, and Tesla, that have played a pivotal role in propelling the markets to new highs in recent weeks. Microsoft alone constitutes 7.3% of the S&P 500, and when combined with the others, their market capitalization surpasses that of all countries’ entire stock markets, except for the United States.
As of last week, Nvidia and Microsoft were responsible for about 75% of the S&P 500’s gains this year, according to analysts at Bespoke Investment Group.
Morgan Stanley analysts expressed confidence in Microsoft’s AI strategy, expecting it to grow even stronger, and raised their price target for the stock to $450 from $415. Bank of America analysts also increased their target to $450 per share, anticipating further growth for the Washington-based company in the current quarter.
