New Delhi: Microsoft has surpassed Apple to become the world’s most valuable company for the first time since 2021. The shift occurred as concerns about smartphone demand affected Apple’s shares, causing a 0.2 percent increase, while Microsoft saw a 1 percent rise. Microsoft’s market capitalization reached a record $2.887 trillion, surpassing Apple’s $2.875 trillion. Apple’s shares have declined by 3 percent in 2024 due to worries about smartphone demand. In contrast, Microsoft has risen by about 3 percent, driven in part by its leadership in generative artificial intelligence through its investment in OpenAI, the creator of ChatGPT.
Microsoft has integrated OpenAI’s technology into its productivity software, contributing to a rebound in its cloud-computing business. This artificial intelligence advantage has positioned Microsoft to challenge Google’s dominance in web search. On the other hand, Apple has faced challenges with tepid demand, particularly in China, where the economy is recovering slowly from the COVID-19 pandemic, and competition from Huawei has intensified.
Apple’s upcoming product launch of the Vision Pro mixed-reality headset on February 2 is considered a significant event. However, analysts estimate that its sales impact on Apple’s earnings per share in 2024 will be relatively insignificant. While Microsoft has briefly held the title of the most valuable company a few times since 2018, this latest shift is notable as it reflects concerns about iPhone demand and supply chain issues related to the COVID-19 pandemic.
Both technology giants are currently trading at relatively high forward price-to-earnings ratios. Apple’s forward P/E is at 28, well above its 10-year average of 19, while Microsoft is trading around 32 times forward earnings, exceeding its 10-year average of 24. In the upcoming quarterly reports, analysts expect Apple to post a modest revenue increase of 0.7 percent to $117.9 billion for the December quarter, marking its first year-on-year revenue growth in four quarters. In contrast, Microsoft is anticipated to report a 16 percent increase in revenue to $61.1 billion, driven by the continued growth of its cloud business. Apple is set to announce its results on February 1, while Microsoft’s report is expected in the coming weeks.
