Microsoft surpasses Apple in market value after two years

With market caps close at $2.887tn and $2.875tn, Microsoft takes the lead amid concerns over iPhone sales

Microsoft’s stock market value surpassed Apple’s for the first time since 2021 on Friday, securing its position as the world’s most valuable company amid concerns about iPhone demand impacting Apple’s shares. On Friday, Apple inched up by 0.2%, while Microsoft gained 1%, resulting in Microsoft’s market capitalization reaching $2.887tn, its highest ever according to LSEG data. Apple’s market capitalization, calculated from a Thursday filing, was $2.875tn.

Concerns over smartphone demand have led to a 3% decline in Apple’s shares in 2024, following a robust 48% surge the previous year. Meanwhile, Microsoft has seen a 3% increase year-to-date, building on a significant 57% surge in 2023. This rally was fueled, in part, by Microsoft’s leadership in generative artificial intelligence, supported by an investment in OpenAI, the creator of ChatGPT.

On December 14, Apple reached its highest market capitalization at $3.081tn, as reported by LSEG.

Microsoft has integrated OpenAI’s technology into its range of productivity software, contributing to a resurgence in its cloud-computing business during the July-September quarter. Additionally, its leadership in artificial intelligence has opened up opportunities to contest Google’s dominance in web search.

On the other hand, Apple is contending with subdued demand, particularly for its flagship product, the iPhone, which is a significant revenue source. Demand in China, a crucial market, has declined as the country’s economy gradually recovers from the impacts of the Covid-19 pandemic, and a resurgent Huawei chips away at Apple’s market share.

The sales of Apple’s Vision Pro mixed-reality headset are scheduled to commence on February 2 in the United States, marking the company’s most significant product launch since the iPhone in 2007. However, according to a recent UBS report, Vision Pro sales are expected to have a “relatively immaterial” impact on Apple’s earnings per share in 2024.

Several times since 2018, Microsoft has temporarily surpassed Apple as the most valuable company, notably in 2021 when concerns about pandemic-related supply-chain shortages impacted Apple’s stock.

In its latest quarterly report in November, Apple provided a sales forecast for the holiday quarter that fell short of Wall Street expectations, primarily due to weak demand for iPads and wearables.

According to LSEG, analysts, on average, anticipate Apple to report a 0.7% year-on-year revenue increase to $117.9bn for the December quarter. If realized, this would mark its first revenue growth in four quarters. Apple is scheduled to release its results on February 1.

Analysts are projecting Microsoft to announce a 16% revenue boost to $61.1bn in the upcoming weeks, driven by sustained growth in its cloud business.