Microsoft Hits $3 Trillion Market Cap Amid AI Surge, Surpasses France’s GDP

Microsoft recently joined the exclusive $3 trillion club, becoming the second company ever to reach this market valuation amid the surge in artificial intelligence (AI) interests. This achievement was announced on Wednesday, with Microsoft’s stock climbing nearly 1.5% to approximately $405 per share, propelling its market cap beyond the $3 trillion mark. This places Microsoft alongside Apple, the only other corporation to hit this historic valuation.

Notably, Microsoft’s market value now surpasses the entire Gross Domestic Product (GDP) of France, positioning it just below the United Kingdom’s economy in size. The company’s shares have seen an impressive uptick, with a more than 7% increase year to date, following a substantial 40% rise last year. This surge is largely attributed to the growing investor excitement around AI technology and its potential to fuel Microsoft’s growth.

Microsoft CEO Satya Nadella committed to a multibillion-dollar investment in AI technologies in 2023, including the integration of advanced AI tools like ChatGPT into Microsoft’s product lineup ahead of competitors. This initiative also involved strengthening Microsoft’s partnership with OpenAI, the creators of ChatGPT, especially during a period of significant organizational changes within the AI firm.

Microsoft’s valuation leap overtook Apple earlier in January, marking a significant shift as Microsoft had been trailing behind Apple for the better part of the last decade. The company is a key player among the “Magnificent 7” – a collective that includes tech giants such as Apple, Nvidia, Amazon, Alphabet, Meta, and Tesla. These companies have been pivotal in driving market indices to new highs, with Microsoft alone constituting 7.3% of the S&P 500.

The dominance of these tech giants is evident as they, together, boast a market capitalization exceeding any other country’s entire stock market, with the exception of the United States. Remarkably, Nvidia and Microsoft combined contributed to about 75% of the S&P 500’s gains this year, showcasing their significant impact on the market. Analysts from Morgan Stanley and Bank of America have recently increased their price targets for Microsoft to $450 per share, reflecting a bullish outlook on the company’s AI strategy and its potential for further growth.