Microsoft has surpassed Apple and is now the world’s largest corporation by market capitalization, spurred by its substantial concentration on generative artificial intelligence (AI), an area that has attracted increasing investor favour.

The IT behemoth has seen notable market increases over the past year, and it, along with Nvidia and Amazon, placed a great deal of emphasis on AI. Interestingly, Microsoft now has a market worth of over $1 trillion more.

Analysts are comparing this change to what happened in the early 2000s, when internet and technology companies started to overtake consumer and financial industries at the top of the market.

According to LSEG data, Microsoft’s market cap stood at $2.887 trillion, its highest ever, while Apple’s market cap was $2.875 trillion as of Friday’s close after peaking at $3.081 trillion on Dec. 14.

Microsoft’s adoption of OpenAI’s technology throughout its productivity software line contributed to a growth in the company’s cloud computing division during the July–September quarter. Its AI leadership has also made it possible to counter Google’s hegemony in online search.

Conversely, Apple is having difficulties dealing with declining demand, particularly for its main device, the iPhone.

The corporation is having special difficulties in China, a crucial country where the COVID-19 pandemic has caused a slow economic recovery and where competition from a resurgent Huawei is getting more fierce, which is hurting its market position.

The market capitalization of other AI-focused tech companies, such Nvidia, Meta Platforms, and Alphabet, has increased significantly over the previous 12 months.

(Adapted from MarketScreener.com)