Microsoft has surpassed Apple to claim the title of the world’s most valuable company, marking a significant shift as Apple’s shares faced a lackluster start in 2024, mainly due to concerns surrounding weakening product demand.
Driven by its early advancements in generative artificial intelligence, Microsoft’s market valuation soared to $2.875 trillion, surpassing Apple for the first time since 2021.
Recent data reveals that Microsoft’s shares experienced a 1.6% increase, reflecting investors’ excitement about the company’s progress in generative AI. In contrast, Apple saw a 0.90% decline, resulting in a market capitalization of $2.871 trillion US Dollers. Analysts attribute Microsoft’s faster growth and substantial gains from the generative AI revolution as key factors in this historic turnaround.
DA Davidson analyst Gil Luria emphasized Microsoft’s inevitable triumph, stating, “Microsoft is growing faster and stands to benefit more from the generative AI revolution.” Apple’s recent challenges are evident in a 3.3% decline in its stock in January, in contrast to Microsoft’s 1.8% rise.
Apple’s difficulties include rating downgrades and concerns about the sales outlook for the iPhone, particularly in the crucial Chinese market. Redburn Atlantic highlighted challenges such as China’s dynamics, heightened Sino-US tensions, and competition from Huawei as potential obstacles to Apple’s performance.
Additionally, regulatory scrutiny on Apple’s services business, particularly the Google search engine deal on iOS, adds further pressure. Despite concluding 2023 with a 48% gain, Apple’s recent obstacles have contributed to Microsoft’s ascendance.
Microsoft’s venture into generative AI, bolstered by its collaboration with OpenAI for ChatGPT-powered tools, has gained favor on Wall Street. The company’s positive outlook is reflected in the absence of “sell” ratings, with nearly 90% of brokerages recommending a buy. In contrast, Apple faces a less optimistic scenario, with two “sell” ratings and only two-thirds of analysts endorsing the stock.
As both tech giants trade at relatively high price-to-earnings ratios, Apple at 28 and Microsoft at 31, the market landscape suggests an evolving dynamic where Microsoft’s momentum could reshape the longstanding narrative of tech supremacy.
