- Microsoft briefly claims world’s most valuable company title, outpacing Apple’s sluggish start in 2024.
- AI investments propel Microsoft’s rise; Apple faces challenges with declining iPhone demand in China alongside resurgent Huawei chips.
- Redburn Atlantic’s concerns prompt Apple downgrade; Microsoft leads with no “sell” ratings on Wall Street.
Microsoft’s surge past Apple in market valuation unveils the power of AI investments, posing challenges for the iPhone giant. The evolving tech landscape shapes market leadership, leaving the industry in anticipation.
Microsoft surges past Apple in market valuation amidst strong AI investments
In a notable development, Microsoft briefly claimed the title of the world’s most valuable company on January 11, 2024, surpassing Apple for the first time since 2021. This shift occurred as Apple faced a sluggish start to the year, raising concerns about demand for its shares.
Microsoft’s recent success can be attributed to its significant advancements in generative artificial intelligence, particularly its investment in OpenAI’s ChatGPT. The company’s stock experienced a 0.5% increase, reaching a market valuation of $2.859 trillion, with a peak value of $2.903 trillion during the session. Meanwhile, Apple’s shares closed 0.3% lower, resulting in a market capitalization of $2.886 trillion.
Also read: Microsoft’s Dee Templeton joins OpenAI’s board: Brilliance or interference?
Microsoft’s rise and apple’s challenges: dissecting market dynamics
Analyst Gil Luria from D.A. Davidson noted that Microsoft’s ascendancy was expected due to its faster growth and substantial benefits from the generative AI revolution. The integration of OpenAI’s technology into Microsoft’s productivity software played a crucial role, leading to a rebound in its cloud-computing business.
On the flip side, Apple encountered challenges with diminishing demand, especially for its flagship product, the iPhone. The Chinese market, vital for Apple, witnessed a decline in demand amidst the country’s gradual economic recovery from the pandemic and increased competition from Huawei.
Concerns about Apple’s future
Redburn Atlantic, a brokerage firm, expressed concerns about Apple’s future performance, particularly in China, prompting a downgrade of Apple’s shares to “neutral.” Since the beginning of 2024, at least three analysts covering Apple have lowered their ratings.
In terms of valuation, Microsoft briefly exceeded Apple at $2.85 trillion. Apple’s shares experienced a 3.3% decline in January, while Microsoft observed a 1.8% rise. Both companies, however, maintain high share price-to-earnings (PE) ratios, with Apple trading at a forward PE of 28 and Microsoft at 31.
Microsoft’s recent lead is not unprecedented, as it has temporarily surpassed Apple a few times since 2018. As of now, Wall Street sentiment favors Microsoft, with no “sell” ratings and approximately 90% of brokerages recommending the stock. In contrast, Apple has received two “sell” ratings, with two-thirds of analysts rating it as a “buy.” The evolving dynamics of the tech industry continue to shape market leadership.
What will happen next? Stay tuned!
