Microsoft Shares Hit All-Time High on AI Optimism, Surpassing $3.48 Trillion Market Cap

Microsoft Corporation (MSFT.US) shares reached a new all-time high on Thursday, surpassing the previous record set nearly a year ago. This surge in stock price is attributed to the growing perception among investors that the software giant is a leading beneficiary of advancements in artificial intelligence (AI).

The company's stock price rose by 0.8% to $467.68, exceeding the peak reached in July of the previous year. This upward trend has resulted in an increase of over 30% from the low point in April, adding more than $80 billion to Microsoft's market capitalization, which now stands at approximately $3.48 trillion. This makes Microsoft the company with the highest market value globally, slightly ahead of another major beneficiary of the AI era, NVIDIA, whose market value is $3.42 trillion.

Microsoft's year-to-date performance has been impressive, with an 11% increase that outpaces the Nasdaq-100 index. The company's recent financial results have bolstered the bullish outlook, as Microsoft is seen as a dominant player in the AI field and one of the key companies monetizing this technology. This has alleviated concerns about the returns on Microsoft's multi-billion-dollar investments in AI.

According to Microsoft's financial reports, both cloud computing and AI services have shown strong growth trends and robust demand. This has reinforced the view that Microsoft is a stable haven amidst economic turbulence, largely unaffected by tariffs and uncertain macroeconomic prospects. The company's significant cost-cutting measures, including substantial layoffs, further underscore its focus on efficiency.

Jim Awad, Senior Managing Director at Clearstead Advisors, commented, "Microsoft has a favorable position in its product line and the ability to truly monetize AI. I believe that in three to four years, it will be one of the companies that benefits the most from AI."

Despite being the furthest from its last record high among the seven tech giants, Microsoft has not lost its appeal. Data indicates that Microsoft is the most widely held stock among bullish funds, with 91% of these funds owning the stock. Additionally, over 90% of analysts tracked by Bloomberg recommend buying Microsoft shares, with no sell ratings issued.

While such widespread optimism can sometimes be seen as a contrarian signal, Wall Street analysts do not appear to believe that Microsoft's rally will end soon. The average target price set by analysts suggests a double-digit percentage increase over the next 12 months.

Awad added, "Microsoft should continue to grow at an astonishing rate, and the stock price does not seem overvalued. When everyone agrees, it can be unsettling, but for now, I believe the consensus is correct."