During the U.S. stock market on Wednesday, several technology giant stocks that dominated the U.S. stock market last year set new all-time highs, driving the S&P 500 index back to historical highs. Among them, Microsoft's market value has reached a historic US$3 trillion.
Microsoft's stock price rose 1.3% to US$403.9 on Wednesday, with its market value exceeding US$3 trillion. The stock price has risen 7.4% this year. Microsoft becomes the second company to reach this milestone, after Apple first crossed the threshold last June.
It also largely reflects investor enthusiasm for artificial intelligence (AI) and its potential to accelerate earnings and revenue growth. Through its partnership with OpenAI, Microsoft is seen as one of the biggest beneficiaries of artificial intelligence, and it has launched a series of artificial intelligence services to customers.
The market expects that Microsoft's revenue in fiscal 2024 is expected to grow by nearly 15%, faster than the entire technology industry. This growth has made Microsoft one of the most popular stocks on Wall Street.
Citi analysts said they expect Microsoft to post "strong growth" in its upcoming earnings report, in part due to its leadership in generative artificial intelligence. Analysts at the bank raised their forecasts and price target for Microsoft in a report on Wednesday and reiterated a buy rating on the stock.
Analysts at Morgan Stanley said on Tuesday that they believe Microsoft's positioning and contributions to generative artificial intelligence are "increasingly strong." They raised their price target to $450 from $415 and said they "remain confident in Microsoft's prospects."
Shares of Google parent Alphabet rose as much as 1.9% and were on track to close at a record high. The search giant's stock price has rebounded recently on optimism about its artificial intelligence positioning. The gains over the past 12 months have helped Alphabet solidify its position as the third most valuable U.S. company after Apple and Microsoft.
Analysts at BMO Capital Markets give it an outperform rating and a price target of $170.00. And lists Alphabet as a top pick in 2024 because of the company's leadership in artificial intelligence.
In addition to Microsoft and Alphabet, the stock prices of Nvidia and Meta have also reached record highs. Tesla is the worst-performing stock among the Big Seven, with the stock down more than 15% so far in January.
Holding shares of the Big Seven is already an especially popular trade heading into 2024. Some investors believe the crowded trading suggests limited upside for the stock going forward. Max Wasserman, co-founder and senior fund manager at Miramar Capital, said it's intriguing that people are starting to take concentrated risk again.
Some people also say that if the development of artificial intelligence matches the early enthusiasm, technology stocks will still have room to rise in the next few years. "People should be excited because when you look two, three, or four years out, it has the potential to be truly transformative," William Blair co-manager Jim Golan said.