Microsoft  (MSFT) – Get Free Report shares hit a record Wednesday, powering the world’s most-valuable tech company past the $3 trillion threshold ahead of its highly anticipated fiscal-first-quarter earnings early next week.

Microsoft, which has added nearly $660 billion in value since December 2021 – more than the entire market cap of Tesla  (TSLA) – Get Free Report – has paced the tech market for much of the past year thanks to its leadership position in AI and its investment in ChatGPT creator OpenAI.

Microsoft has touted the potential of ChatGPT, a tool that uses human language to process instructions, to close the gap on market leader Google, the eponymous lead product of parent Alphabet.  (GOOGL) – Get Free Report

Investors are betting that AI adoption will help Microsoft, which generated just $3.2 billion in search revenue last year, challenge the market dominance of Google, which churned around $43 billion.

Wall Street’s view of Microsoft

Analysts expect Microsoft to post a bottom line of $2.78 a share when it publishes its December-quarter earnings next week, a 20% surge from the same period in 2022. Group revenue is also set to impress, with analysts seeing a 16% increase to a record $61.1 billion.

Revenue from Microsoft’s Intelligent Cloud division, including the flagship Azure platform, which powers much of the group’s AI products, is forecast to rise 17.5% to around $25.3 billion.

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“We believe the key narrative for 4Q earnings season is the beginning of the AI Revolution hitting the shores of the broader tech landscape being led by [CEO Satya Nadella] and Microsoft along with the Godfather of AI, [Jensen Huang] and Nvidia,” said Wedbush analyst Dan Ives in a Tuesday client note.

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“In our opinion monetization of Co-Pilot and customer conversations in Redmond are on an eye-popping pace as our checks are indicating Microsoft is humming on the AI front heading into 2024,” he added.

“While Microsoft and Nvidia are the tip of the sphere of the AI Revolution, now we start to see the unprecedented spending and demand for the 2nd/3rd/4th derivatives of AI across the software, chip, and hardware ecosystem.”

Microsoft shares were marked 1.3% higher in early Wednesday trading and changing hands at $404.16 each. That move extends the stock’s six-month gain to around 16.8%. 

The stock hit an intraday all-time high of $404.08 earlier in the session and is now valued at just under $3.1 trillion.

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