Microsoft Surpasses Apple to Become World’s Most Valuable Company

On Thursday, Microsoft surpassed Apple to become the world’s most valuable company, marking a significant shift in the market attributed to Apple’s weak start in 2024 due to growing demand concerns. Microsoft’s rise was fueled by a 1.5% increase in shares, giving it a market valuation of $2.888 trillion. In contrast, Apple’s market capitalization of $2.887 trillion marked the first time since 2021 that it fell below that of Microsoft.

Apple’s stock has faced a 3.3% decline in January, with concerns arising from rating downgrades and potential weakness in iPhone sales, particularly in the crucial Chinese market. Redburn Atlantic expressed concerns about China impacting Apple’s performance, citing competition from Huawei and increased Sino-U.S. tensions. Additionally, scrutiny on the deal making Google the default search engine on iOS poses a threat to Apple’s services business.

Microsoft, with a 57% rise in stock compared to Apple’s 48% gain in 2023, has aggressively introduced genAI-powered tools, capitalizing on its collaboration with OpenAI. This marks Microsoft’s intermittent lead over Apple since 2018.

Investor sentiment favors Microsoft on Wall Street, with no “sell” ratings and approximately 90% of brokerages recommending the stock. In contrast, Apple faces two “sell” ratings, and only two-thirds of analysts rate it a “buy.”

Both companies appear relatively expensive in terms of their price-to-expected earnings ratio. Apple, trading at a forward PE of 28, exceeds its 10-year average of 19. Microsoft’s forward PE is around 31, surpassing its 10-year average of 24, according to LSEG data.

The dynamics between Microsoft and Apple underscore the evolving landscape of technology stocks, with Microsoft gaining an edge in valuation as Apple grapples with concerns over iPhone sales and regulatory challenges in key markets.