Microsoft and Apple shares have been vying for the top spot
as the most capitalized stock on Wall Street since the start of the year, with
the iPhone maker briefly losing its crown to the software giant earlier in
January.
Shares of Microsoft hit a record high of $405.63, up 1.7%,
enabling it to breach the $3 trillion market capitalization level. But it later
closed at $402.56, valuing Microsoft at $2.99 trillion, just below the
threshold price of $403.65 that would have kept it above $3 trillion.
Apple's shares pared earlier gains and closed down 0.35% at
$194.50, giving it a market value of $3 trillion, according to LSEG data.
Backed by its investment in ChatGPT maker OpenAI, Microsoft
is widely seen as a frontrunner in the race for market dominance in the rollout
of generative artificial intelligence (AI) among other tech heavyweights,
including Google owner Alphabet (GOOGL.O), opens new tab, Amazon.com (AMZN.O),
opens new tab, Oracle (ORCL.N), opens new tab, and Facebook owner Meta
Platforms (META.O), opens new tab.
Using OpenAI's technology, Microsoft has rolled out newer
versions of its flagship productivity software products as well as its Bing
search engine, which is expected to better compete with Google's dominant
search offering.
Apple, on the other hand, is facing slowing demand for its
iPhones, particularly in China, where the company is offering customers rare
discounts to boost sales amid stiff competition from homegrown rivals such as
Huawei Technologies (HWT.UL).
"I think it's AI optimism for Microsoft," said
Stifel analyst Brad Reback, adding that Apple doesn't seem to have the same
"clear AI story" coupled with concerns about iPhone sales growth
rates and penetration.
The 54 analysts covering Microsoft's stock have a median
price target of $425, up from $415 a month ago, and their average
recommendation is "buy", according to LSEG data.
Buoyed by AI optimism, Microsoft shares gained nearly 57% in
2023 and are up 7% this year. Apple's stock rose by 48% last year and is up
about 1% year-to-date.
Wall Street's run-up to record highs will be put to the test
in the coming weeks as megacap U.S. technology-related companies begin
reporting results.
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