SUMMARY
- Microsoft has recorded the highest market cap in history for the company.
- Microsoft records a market cap of $3 trillion, which is still behind Apple.
Just a day ahead of Microsoft dropped the dreaded news of layoffs to its employees, the company had achieved an important milestone. Notably, prior to this Microsoft was named a billion-dollar company in 1986. After that, it crossed the $1 trillion mark in 2019 and later $2 trillion two years later.
The company’s success and milestones are largely attributed to the company’s initiatives and faith in Artificial Intelligence (AI) technologies. Unfortunately, the joy didn’t last since just a day later, Microsoft Gaming CEO, Phil Spencer, rolled out an internal memo announcing that they were letting go of 8% of their workforce, which includes 1,900 individuals
Microsoft records $3 Trillion market cap
On Wednesday, January 24, 2024, Microsoft’s stock rose to a record-high $402.46, up 1.7%, thus driving it to the $3 trillion market capitalization mark. However, it finished the session just short at $402.56, valuing Microsoft at $2.99 trillion. Had it closed at the needed level of $403.65, the company would have closed above $3 trillion.
Microsoft just closed with a $3 trillion market value for the first time
— Moe (@moneyacademyKE) January 26, 2024
With that Microsoft has achieved the new milestone with its stock market value having crossed the $3 trillion mark for the first time in history. It also means that Microsoft has retained its place as the world’s second most valuable company. Ahead of Microsoft is Apple. Notably, the shares of the two companies have been contending for the top spot of the most capitalized stock on Wall Street ever since the beginning of the New Year.
The iPhone owner briefly lost its crown to Microsoft earlier in January, however, it has reclaimed its spot. Apple’s shares dropped from the earlier gains and closed down 0.35% at $194.50, which reportedly gave it a market value of $3 trillion, according to LSEG data.
Microsoft valuation today $3 Trillion. One company is worth almost 7x the South African GDP ($400 billion). pic.twitter.com/WJmvWOeWNc
— DR. IQBAL SURVÉ (@IqbalSurve) January 26, 2024
In recent years, the company’s success has majorly been driven by two factors, namely, its growing Azure cloud computing business as well as the company’s belief that it is one of the companies to profit most from the use of generative artificial intelligence.
How did Microsoft record $3 trillion?
Microsoft has been considered in the forefront of the AI revolution with investment in ChatGPT maker OpenAI and others. The 50-year-old company has been making sure to stay ahead in the race for market dominance in the usage of generative artificial intelligence (AI) among other tech. This includes Google owner Alphabet, Amazon.com, Oracle, and Facebook owner Meta Platforms.
Interestingly, Microsoft has already rolled out newer renditions of its flagship productivity software products and its native Bing search engine using OpenAI’s technology. This is further expected to compete with Google’s dominant search offering.
In fact last year Microsoft CEO Satya Nadella skilfully handled the exit of Sam Altman from OpenAI, by quickly hiring him to lead Microsoft’s new AI research lab. Simultaneously, Satya also helped OpenAI’s board reach the decision to get Altman back as its CEO unanimously. This was also a major positive development for Microsoft.
On the contrary, its competitor, Apple, has been facing slowing demand for its iPhones, especially in China. This is even after the company offering customers rare discounts to pump up sales in the county amid tough competition from native rivals such as Huawei Technologies.
Stifel analyst Brad Reback, says, “I think it’s AI optimism for Microsoft,” counting that Apple at this point does not seem to have a “clear AI story.” Driven by AI optimism, Microsoft shares have gained nearly 57% in 2023 and have risen by 7% this year. On the other hand, Apple’s stock grew by 48% in 2023 and just about 1% year-to-date.