Microsoft Corporation (NASDAQ: MSFT) became the world’s most valuable company on Friday, surpassing Apple (NASDAQ: AAPL) in stock market value for the first time since 2021. This shift occurred as concerns about demand hit the iPhone maker’s shares.
On Friday, Apple saw a marginal increase of 0.2%, whereas Microsoft experienced a 1% increase. With that, Microsoft achieved a historic milestone, with its market capitalization reaching an all-time high of $2.887 trillion. Meanwhile, Apple’s market capitalization stood at $2.875 trillion.
Apple stock faces a 3% decline in 2024 amid smartphone demand concerns, following a 48% surge the previous year. Microsoft has seen a 3% increase year to date, building on a significant 57% growth in 2023. This growth was fueled partly by its lead in generative artificial intelligence through an investment in OpenAI, the creator of ChatGPT.
Apple (NASDAQ: AAPL) reached its highest market capitalization at $3.081 trillion on December 14, as reported by LSEG.
Microsoft Corporation (NASDAQ: MSFT) has seamlessly integrated OpenAI’s technology across its suite of productivity software. This move has not only ignited a significant resurgence in its cloud-computing business during the July-September quarter but has also positioned the tech giant to challenge Google’s longstanding dominance in web search.
Meanwhile, Apple is contending with subdued demand, particularly for its flagship product, the iPhone, which traditionally serves as a primary revenue source. The demand slump is notably pronounced in China, a key market for the tech giant. The decline is attributed to the sluggish economic recovery from the COVID-19 pandemic in the country, coupled with the resurgence of Huawei, which is gradually eating into Apple’s market share.
The highly anticipated sales launch for Apple’s Vision Pro mixed-reality headset is scheduled for February 2 in the United States, representing Apple’s most significant product debut since the iconic iPhone in 2007. However, a recent UBS report estimates that Vision Pro sales will have a “relatively immaterial” impact on Apple’s earnings per share in 2024.
Microsoft Corporation (NASDAQ: MSFT) has elbowed Apple as the most valuable company multiple times since 2018. The latest occurrence was in 2021 when supply chain shortages related to the COVID-19 pandemic impacted Apple’s stock price.
Both tech stocks seem relatively expensive when considering their price-to-earnings ratios, a standard metric for valuing publicly listed companies. Based on LSEG data, Apple currently boasts a forward price-to-earnings (PE) ratio of 28, above its 10-year average of 19. Meanwhile, Microsoft is trading at approximately 32 times forward earnings, higher than its 10-year average of 24.
In its November quarterly report, Apple provided a sales forecast for the holiday quarter that fell short of Wall Street expectations, primarily due to subdued demand for iPads and wearables.
On average, analysts anticipate Apple reporting a 0.7% revenue increase to $117.9 billion for the December quarter, as per LSEG. This would mark its first year-on-year revenue growth in four quarters. The company is scheduled to announce its results on February 1.
Analysts anticipate Microsoft to reveal a 16% revenue surge, reaching $61.1 billion in its upcoming report, driven by sustained growth in its cloud business.
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