On Tuesday, Microsoft shares closed at $361, surpassing the previous high of July this year. The price rose for the eighth day in a row, and the shares thus experienced the longest “winning streak” since January 2021. As a result, the market value of the company climbed up to 2.68 trillion dollars, i.e. almost 62 trillion crowns in conversion. In this regard, the company from Redmond, Washington is already ahead of the iPhone smartphone manufacturer Apple with a capitalization of 2.8 trillion dollars.
The stock hit record highs shortly after a developer conference hosted by startup OpenAI, a firm in which Microsoft is a major investor. It is best known for its ChatGPT chatbot built on artificial intelligence and presented its new version GPT-4 Turbo at the conference.
The ChatGPT tool has become a huge hit this year, and its paid version in particular has huge commercial potential for business customers in the future. Microsoft should also benefit from it, thanks to the growth of OpenAI’s value. And it’s already profiting: the value of the company, which was founded in 2015, is currently estimated at 80 to 90 billion dollars. This makes it one of the most valuable startups not only in Silicon Valley, but also on a global scale. At the same time, in April of this year, its valuation was close to 30 billion dollars.
According to some information, Microsoft owns a 49 percent stake in OpenAI, the value of which should continue to grow significantly. While the OpenAI company expects sales of around one billion dollars this year, according to the Wall Street Journal, it should be several times that next year. And steep income growth is expected in the coming years as well. This puts OpenAI and, together with it, Microsoft at the head of the business peloton associated with artificial intelligence.
The Internet search engine Bing, owned by Microsoft, is also benefiting from the popularity of artificial intelligence, which until recently was in the shadow of the dominant Google. Bing has offered some services based on OpenAI technology to its users and thus has a great chance to take a large part of Internet advertising.
In addition, Microsoft benefits from the increasing interest in the use of artificial intelligence by companies, thanks to its strong position in the provision of cloud services. The business associated with the Azure platform, whose main competitor is Amazon’s AWS service, grew by 29 percent year-on-year in terms of revenue in the third quarter of this year. At the same time, the numbers exceeded analysts’ expectations.
“Being ahead of estimates is clear evidence that Microsoft can monetize artificial intelligence and that it occupies the position of a clear leader in the field of artificial intelligence,” commented Josh Gilbert, an analyst at the eToro brokerage platform, on the results published at the end of October. And precisely these aspects are reflected in the confidence of investors and interest in the company’s shares.
Microsoft’s overall results were also better than expected in the previous quarter. Revenues of the company, also known for its Office suite of office programs, grew by 13 percent year-on-year to $56.5 billion. Here, too, analysts expected a lower figure. And the net profit figure also beat forecasts: it rose to $22.3 billion in the July-September period, up 27 percent from the same period last year.
Microsoft is one of the seven large American technology companies that stock market investors and the financial media collectively refer to as the Magnificent Seven, after the English title of the western film The Brave Seven. In addition to Microsoft, the seven also include Apple, Alphabet (operator of Google), Amazon, Nvidia, Tesla and Meta Platforms (formerly Facebook).
It is the securities of these seven corporations that are driving the S&P 500 stock market index this year. In it, individual companies are weighted according to the size of their market value, and this indicator has gained approximately 14 percent since the beginning of the year. But if there was no big successful seventh, the plus-minus indicator would be zero.