The Microsoft logo is pictured at the Mobile World Congress 2023 in Barcelona, Spain, on March 2, 2023. (PHOTO / AP)

NEW YORK - Microsoft's stock market value crossed the $3 trillion milestone for the first time on Wednesday, retaining its place as the world's second most valuable company, just behind Apple.

Microsoft and Apple shares have been vying for the top spot as the most capitalized stock on Wall Street since the start of the year, with the iPhone maker briefly losing its crown to the software giant earlier in January.

Shares of Microsoft hit a record high of $405.63, up 1.7 percent, enabling it to breach the $3 trillion market capitalization level. But it later closed at $402.56, valuing Microsoft at $2.99 trillion, just below the threshold price of $403.65 that would have kept it above $3 trillion.

Apple's shares pared earlier gains and closed down 0.35 percent at $194.50, giving it a market value of $3 trillion, according to LSEG data.

In this Nov 6, 2023 file photo, Sam Altman (left) appears onstage with Microsoft CEO Satya Nadella at OpenAI's first developer conference in San Francisco, the United States. (PHOTO / AP)

Backed by its investment in ChatGPT maker OpenAI, Microsoft is widely seen as a frontrunner in the race for market dominance in the rollout of generative artificial intelligence among other tech heavyweights, including Google owner Alphabet, Amazon.com, Oracle and Facebook owner Meta Platforms.

Using OpenAI's technology, Microsoft has rolled out newer versions of its flagship productivity software products as well as its Bing search engine, which is expected to better compete with Google's dominant search offering.

ALSO READ: Microsoft edges out Apple as world's most valuable company

Apple, on the other hand, is facing slowing demand for its iPhones.

The iPhone 15 phones are shown during an announcement of new products on the Apple campus in Cupertino, Calif, Sept 12, 2023. (PHOTO / AP)

"I think it's AI optimism for Microsoft," said Stifel analyst Brad Reback, adding that Apple doesn't seem to have the same "clear AI story" coupled with concerns about iPhone sales growth rates and penetration.

The 54 analysts covering Microsoft's stock have a median price target of $425, up from $415 a month ago, and their average recommendation is "buy", according to LSEG data.

Buoyed by AI optimism, Microsoft shares gained nearly 57 percent in 2023 and are up 7 percent this year. Apple's stock rose by 48 percent last year and is up about 1 percent year-to-date.

READ MORE: Microsoft offers $20 consumer AI subscription to boost business

Wall Street's run-up to record highs will be put to the test in the coming weeks as megacap US technology-related companies begin reporting results.