Microsoft's market cap hit $2.89 trillion as it overtook Apple as the world's most valuable public company

Microsoft closed out Friday as the world's most valuable publicly traded company, pushing its long-time rival Apple off the top spot.

The tech giant hit a market cap of $2.89 trillion while Apple's fell slightly to $2.87 trillion.

Much of Microsoft's success has been credited to it embracing AI, led by the company's lucrative $10 billion investment in Sam Altman's OpenAI.

This Thursday, Microsoft reportedly impressed developers with its AI capabilities at an event in San Francisco, with analysts saying they were "encouraged by the momentum around the most mature AI products," CNBC reported.

The rise of artificial intelligence has captivated investors and helped leave the NASDAQ-100 up nearly 54% last year.

And many analysts predict the AI boom will continue into 2024.

"AI will carry on being a dominant theme in 2024 — we're kind of only scratching the surface of it at the moment," Minerva Analysis founder Kathleen Brooks previously told Business Insider.

Meanwhile, 2024 hasn't started well for Apple.

The tech giant is embroiled in a public legal battle that has blocked US sales of its Apple Watch and suffered three stock downgrades so far in January.

The first downgrade by UK bank Barclays wiped out more than $100 billion in market cap in a single day.

Apple's problems in China are also expected to continue this year, as Chinese government officials are banned from using the California-based company's devices and homegrown rivals like Huawei are gaining ground.

Jefferies analysts recently said that the slow sales for the iPhone 15 in China have resulted in a 30% year-on-year decline in the country.