Microsoft surpasses Apple in market valuation

Microsoft temporarily took the lead over Apple in market valuation, indicating a noteworthy shift in the technology industry landscape.

Microsoft’s stock concluded 0.5% higher, reaching a market capitalization of $2.859 trillion, while Apple closed 0.3% lower at $2.886 trillion.

This brief change follows Microsoft’s significant advancements in generative AI, fueled by its investment in OpenAI, the creator of ChatGPT.

Analysts attribute Microsoft’s growth to its swift expansion and strategic integration of OpenAI’s technology into its suite of productivity software. The generative AI revolution has propelled Microsoft’s cloud-computing business, contributing to its remarkable market performance.

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A key factor behind Microsoft’s upswing can be traced to its flagship AI product, Copilot for Microsoft 365.

In contrast, Apple is contending with diminishing demand, particularly for its primary revenue source, the iPhone.

Economic challenges in China, a crucial market for Apple, along with competition from Huawei, have resulted in a decline in market share and raised performance concerns.

Several analysts have downgraded their ratings for Apple in 2024, foreseeing potential challenges in the years ahead.

Foxconn, the Chinese assembler of Apple’s iPhones, reported a year-over-year revenue decline, further intensifying concerns.

The New York Times has also reported that the U.S. Department of Justice is pursuing an antitrust case against Apple, expected to materialize later this year.

A comparison of stock performance reveals a 3.3% decline in Apple’s shares in January, in contrast to Microsoft’s 1.8% rise during the same period. Both companies, however, are trading at relatively high share price-to-earnings (PE) ratios.

Apple’s forward PE of 28 surpasses its 10-year average of 19, while Microsoft’s forward PE is 31, exceeding its 10-year average of 24.

This marks another instance of Microsoft surpassing Apple in market value, as it previously did in 2021, 2020, and 2018.