Microsoft surpasses Apple to become the world's most valuable company
As of January 11, 2024, Microsoft has briefly overtaken Apple as the world's most valuable company with a market capitalization of $2.875 trillion
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As of January 11, 2024, Microsoft has briefly overtaken Apple as the world's most valuable company with a market capitalization of $2.875 trillion, while Apple's market capitalization has fallen to $2.871 trillion. This shift is attributed to concerns over demand for Apple's products, particularly the iPhone, leading to a weak start for the company in 2024.
Microsoft's lead is attributed to its early success in the race to profit from generative artificial intelligence, which has drawn investor interest. The growth and potential benefits from the generative AI revolution are cited as factors contributing to Microsoft's faster growth compared to Apple.
Analysts, such as Gil Luria from D.A. Davidson, suggest that Microsoft's overtaking of Apple was inevitable given Microsoft's faster growth and greater potential from the generative AI revolution.
The weakness in Apple's stock is linked to a series of rating downgrades, raising concerns about iPhone sales, especially in major markets like China. Competition from companies like Huawei, along with Sino-U.S. tensions, has increased pressure on Apple. Additionally, regulatory scrutiny on a deal that makes Google the default search engine on iOS poses a threat to Apple's services business, which has been a bright spot in recent quarters.
Microsoft's positive performance is highlighted, with the company aggressively rolling out genAI-powered tools in 2023, thanks to its collaboration with OpenAI, the maker of ChatGPT.
Both companies are considered relatively expensive in terms of their price-to-expected-earnings ratios. Apple's forward PE is noted to be 28, well above its 10-year average of 19, while Microsoft is trading around 31 times forward earnings, exceeding its 10-year average of 24.
As of now, Microsoft has no "sell" ratings on Wall Street, and nearly 90% of brokerages covering the company recommend buying the stock. In contrast, Apple has two "sell" ratings, and only two-thirds of analysts covering the company rate it as a "buy."
It's important to note that stock market dynamics can change rapidly, and the information provided here reflects the situation as of January 11, 2024.
