Microsoft Overtakes Apple as World's Most Valuable Company

Microsoft surpassed Apple as the world's most valuable company on Thursday, driven by Apple's weak start in 2024 amid concerns over demand for its products. Microsoft's market valuation reached $2.875 trillion with a 1.6% increase, fueled by its early lead in capitalizing on generative artificial intelligence. Apple, facing a 0.9% dip, now holds a market capitalization of $2.871 trillion, marking the first time since 2021 that it has fallen below Microsoft.

Microsoft's growth, particularly in generative AI, played a crucial role in overtaking Apple, according to D.A. Davidson analyst Gil Luria. Apple's stock declined by 3.3% in January, contrasted with Microsoft's 1.8% rise, as concerns over iPhone sales, especially in China, grew due to competition from Huawei and escalating Sino-U.S. tensions. Rating downgrades contributed to Apple's stock weakness, with concerns about iPhone sales and regulatory scrutiny on the default search engine deal with Google.

Despite Apple's market capitalization peaking at $3.081 trillion in December 2023, it ended the year with a 48% gain, less than Microsoft's 57% rise, driven by the latter's aggressive rollout of genAI-powered tools in collaboration with OpenAI.

Microsoft previously led in market valuation over Apple in 2021 amid COVID-related supply chain concerns. Currently, Wall Street favors Microsoft, with no "sell" ratings and nearly 90% of brokerages recommending the stock. In contrast, Apple has two "sell" ratings, and only two-thirds of analysts rate it as a "buy." Both companies appear relatively expensive in terms of their price-to-earnings ratios compared to their historical averages. Apple's forward PE is at 28, exceeding its 10-year average of 19, while Microsoft trades at around 31 times forward earnings, surpassing its 10-year average of 24, according to LSEG data.

Post a Comment

Previous Post Next Post

Contact Form