Microsoft, the manufacturer of windows operating systems, ended the session on Friday trading higher than Apple for the first time since 2021, which means that Microsoft replaces Apple as the world’s most valuable company.
Microsoft gained almost 1% of shares value on Friday, Apple only managed to gain 0.2%, as increasing concerns about the mobile demand in 2024 hit the iPhone maker’s shares. At the end of the trading session, the market capitalization of Apple stood at $2.875 trillion, while Microsoft inched up barely with a market capitalization of $2.887 trillion.
Growing concerns about demand for smartphones have pulled down Apple shares value by nearly 3% so far in 2024 after witnessing a massive rally of 48% last year. Just as the case, Microsoft is 3% up since the first day of the year after surging more than 57% in 2023 in a boom driven by its generative AI investment in ChatGPT and its ever-growing popularity.
Earlier Apple’s market capitalization peaked on December 14th with a value of $3.081 trillion.
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The Race for most valuable company
The reason behind Microsoft replaces Apple as the world’s most valuable company more often in recent times is where Microsoft has been working on newer technologies and has integrated the OpenAI’s ChatGPT across its suite of software, which has not only helped it in rebounding the demand for its cloud-computing business , but also has increased its lead in the AI race giving it a heads up in the race with Google and challenge its dominance in Search Engine.
However, on the other hand, Apple has been struggling with a timid demand, specifically for its cash cow Iphone. The main reason for a low demand for the smartphone manufacturer is a slow recovery in China, a major market for Iphone, from Covid-19 pandemic and a revitalization of its rival Huawei in the market.
Apple launched its vision Pro-mixed reality headset in February last year, marking its biggest product launch since the Iphone in 2007. However, UBS in a report published this week noted that the sales from its vision Pro-head set won’t have much difference in its total revenue share in 2024.
Microsoft has been briefly taking over Apple as the world’s most valuable company a handful of times. The latest one in 2021, when fears about shortages of supplies were created due to Covid-19 pandemic.
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The stock markets
Both tech stocks seem to be relatively expensive in terms of P/E ratio, a common method of valuing public listed companies. Microsoft is currently trading with a P/E of 32, well above its 10 years’ average of 24.
Meanwhile, Apple is also trading relatively higher at a P/E of 28, above its normal ranges of 19 over the past 10 years. Moreover, in a recent sales report published in November, Apple gave a forecast for the holiday quarter which was well below the expectation at the Wall Street.
Analysts estimates that Apple will post a 0.7% increase in its revenue in the fourth quarter with a revenue of $117.9 billion, while Microsoft will record a revenue of $61.1 billion with gaining over 16% in business.
