Microsoft edges out Apple in market value showdown

Concerns regarding the smartphone demand led to a 3% decline in Apple’s share value so far in 2024
An undated image of Microsofts headquarters. — Pixabay
An undated image of Microsoft's headquarters. — Pixabay

Microsoft on Friday became the world’s most valuable company after its stock market value ended a trading session higher than Apple’s as concerns regarding demand hit the latter’s share.

Apple’s share rose up by 0.2% on Friday, while Microsoft added 1%. According to the LSEG data, the market capitalization stood at its highest ever — $2.887 trillion.

Concerns regarding the smartphone demand led to a 3% decline in Apple’s share value so far in 2024 which was alarming the company’s share rallied over 48% in 2023.

Meanwhile, it was learnt that Microsoft’s shares rose over 3% so far this year which continues last year's momentum as the company’s share surged 57% in 2023 which was led by generative artificial intelligence because of Microsoft’s investment in ChatGPT-maker OpenAI.

Apple's market capitalisation peaked at $3.081 trillion on Dec. 14, according to LSEG.

Microsoft has incorporated OpenAI's technology across its suite of productivity software, a move that helped spark a rebound in its cloud-computing business in the July-September quarter. Its AI lead has also created an opportunity to challenge Google's dominance of web search.

Apple, meanwhile, has been grappling with tepid demand, including for the iPhone, its cash cow. Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the COVID-19 pandemic and a resurgent Huawei erodes its market share.

Sales of Apple's Vision Pro mixed-reality headset start on Feb. 2 in the United States, marking Apple's biggest product launch since the iPhone in 2007. However, UBS in a report this week estimated that Vision Pro sales would be "relatively immaterial" to Apple's earnings per share in 2024.

A handful of times since 2018, Microsoft has briefly taken the lead over Apple as the most valuable company, most recently in 2021, when concerns about supply chain shortages related to the COVID-19 pandemic hit the iPhone maker's stock price.

Both tech stocks look relatively expensive in terms of price to their expected earnings, a common method of valuing publicly listed companies. Apple is trading at a forward PE of 28, well above its average of 19 over the past 10 years, according to LSEG data. Microsoft is trading around 32 times forward earnings, above its 10-year average of 24.

In its most recent quarterly report in November, Apple gave a sales forecast for the holiday quarter that missed Wall Street expectations, hurt by weak demand for iPads and wearables.

Analysts on average see Apple posting revenue up 0.7% to $117.9 billion for the December quarter, according to LSEG. That would mark its first year-on-year revenue increase in four quarters. Apple reports its results on Feb. 1.

Analysts see Microsoft reporting a 16% increase in revenue to $61.1 billion, lifted by ongoing growth in its cloud business when it reports in the coming weeks.