Microsoft briefly hit US$3 trillion value to surpass Apple, shares close at record on AI optimism

The stock rose as much as 1.7 per cent to US$405.63, taking its market capitalisation just over US$3 trillion during market hours. However, it closed up just 0.9 per cent, ending at a record but with a valuation of US$2.99 trillion.

“There is a huge push toward generative AI, and Microsoft is holding a tremendous number of the cards with its offerings,” said Ted Mortonson, technology desk sector strategist at Baird.

“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.”

The Redmond, Washington-based company is one of the so-called Magnificent 7 that fuelled the market’s advance over 2023, gaining about 57 per cent. The advance continued into this year, with a 7.1 per cent rise that exceeds the 4 per cent gain of the Nasdaq 100 Index. Microsoft accounts for 7.25 per cent of the S&P 500 Index.

“We understand that companies like Apple and Google and Meta are working on ways to monetise generative AI, but you have to admit that Microsoft right now really is the only working model where you can engage with ChatGPT for a subscription,” said Brian Mulberry, client portfolio manager at Zacks Investment Management.

Demand for AI services, along with cloud computing to support it, is projected to support Microsoft’s long-term growth trends. Revenue is expected to rise 15 per cent in its 2024 financial year, faster than the overall tech sector, according to data from Bloomberg Intelligence.

Microsoft will report its second-quarter results later this month.

This kind of growth has resulted in Microsoft being one of the most popular stocks on Wall Street. More than 90 per cent of the analysts tracked by Bloomberg recommend buying shares, and the average analyst price target points to upside of about 7 per cent from current levels.