Microsoft’s shares reached an all-time high of $360.53 on Tuesday, marking the eighth consecutive day of gains, a feat not seen since January 2021. This surge was attributed to the fresh optimism surrounding growth prospects from their strategic partner in artificial intelligence, OpenAI. As a result of this 1.12% daily increase, Microsoft’s market value now stands at approximately $2.68 trillion.

In addition to Microsoft’s remarkable performance, the major U.S. indices also posted gains for the day, with the S&P 500 notching its seventh consecutive rise, while Microsoft extended its streak to the eighth day.

The recent surge in Microsoft’s stock can be directly linked to OpenAI’s series of updates, announced at an event in San Francisco on Monday. These updates include price reductions and plans to enable users to create custom versions of the ChatGPT chatbot. Microsoft CEO Satya Nadella played a prominent role in the event, highlighting that developers using OpenAI’s tools could expedite their entry into the market by leveraging Microsoft’s Azure cloud infrastructure.

It’s worth noting that Microsoft has made a substantial investment of $13 billion in OpenAI. This strategic partnership grants Microsoft an exclusive license for OpenAI’s GPT-4 large language model, renowned for its ability to generate human-like prose in response to minimal text inputs. In a recent announcement, Microsoft introduced an AI add-on for its Office productivity app subscriptions and a Windows 11 assistant, both of which rely on OpenAI models.

UBS analysts, led by Karl Keirstead, expressed their optimism in a note to clients, stating, “What is good for OpenAI is good for Azure in our view.” They emphasized that OpenAI’s active efforts to encourage software developers to build applications using ChatGPT/GPT-4, along with lowering price points and enhancing model performance, could drive increased OpenAI consumption of Azure and serve as a modest positive for Microsoft. The UBS analysts maintain a buy rating for Microsoft stock.

Oppenheimer analysts, also holding the equivalent of a buy rating, pointed out that OpenAI’s price updates reaffirm OpenAI’s status as the leader in its category. They highlighted the mutually synergistic relationship between OpenAI’s success and Microsoft’s interests. Microsoft officially recognized OpenAI as its “strategic partner” in AI in a regulatory filing made in October.

In summary, Microsoft’s record-breaking performance is intrinsically linked to the optimism surrounding OpenAI’s latest developments. With their strategic partnership and shared goals, Microsoft and OpenAI are poised to continue shaping the future of artificial intelligence.