In a surprising turn of events, Microsoft briefly surpassed Apple as the world's most valuable company, thanks to its successful foray into generative AI. On Thursday, Microsoft's stock experienced a significant jump of up to 2%, pushing its market valuation to an impressive $2.903 trillion. Meanwhile, Apple's market cap dropped to $2.871 trillion after its shares fell by 0.9%. This marked the first time since 2021 that Apple's value fell below that of Microsoft.

However, the lead was short-lived, as Apple quickly regained its title later in the day. Microsoft's valuation fell to $2.849 trillion, allowing Apple to reclaim the top spot. The surge in Microsoft's shares followed the company's announcement that its revenue had grown by 7% to $52.9 billion in the third quarter, surpassing analysts' expectations.

The success of Microsoft's AI initiatives played a significant role in its stock surge. At the beginning of 2023, the company announced a $10 billion multiyear investment in OpenAI, a startup led by Sam Altman. OpenAI is the force behind ChatGPT, a groundbreaking generative AI chatbot that took the world by storm in 2023. Microsoft's integration of AI technology into its cloud computing business contributed to its impressive financial performance.

In contrast, Apple, which became the first U.S. company to reach a market value of $3 trillion in 2022, has experienced a decline in sales of its iPhones. As iPhones account for a significant portion of Apple's profits, this slump has negatively impacted the company's stock price. Consequently, Apple's stock fell below the milestone threshold. Despite being a recent entrant into the AI market, Apple has not witnessed the same AI-fueled stock surges as Microsoft and other tech giants.

According to the Motley Fool, several major tech companies, including Google, Amazon, and Meta, have seen an increase in their stock value by announcing plans to develop AI-powered chatbots or integrate AI technology into their products and operations. Companies that mentioned AI experienced an average stock price increase of 4.6%, while those that did not only saw a 2.4% increase, as reported by stock research platform Wall Street Zen.

The rivalry between Apple and Microsoft for the title of the world's most valuable company has been ongoing. Microsoft's recent success can be attributed to its substantial investment in AI, particularly its partnership with OpenAI. Microsoft has embraced AI not only in its cloud computing business but also in its Bing search engine. On the other hand, Apple has faced concerns about iPhone sales, particularly in the crucial Chinese market.

The COVID-19 pandemic has also impacted the fortunes of both companies. Microsoft benefited from the remote working boom, which increased the demand for its software. In contrast, Apple experienced difficulties in its supply chain and faced COVID-related restrictions at its factories in China. These challenges resulted in delayed deliveries of Apple's models.

Since 2010, Apple has held the top position as the world's most valuable company, primarily due to the immense success of the iPhone. Microsoft has struggled to compete in this area. However, the AI boom has presented new opportunities for Microsoft, leading to its recent surge in valuation. Earlier this year, Nvidia, a company specializing in computer chips for AI, became the first chipmaker to achieve a valuation of $1 trillion.