Microsoft Surpasses Apple to Become World’s Most Valuable Company

Apple witnessed a marginal 0.2% increase in its stock on Friday, while Microsoft registered a 1% gain.

On Friday, Microsoft (MSFT.O) achieved a significant milestone by surpassing Apple (AAPL.O) in stock market value for the first time since 2021.

This development positioned Microsoft as the world’s most valuable company, as concerns about iPhone demand negatively impacted Apple’s shares.

Apple witnessed a marginal 0.2% increase in its stock on Friday, while Microsoft registered a 1% gain.

Consequently, Microsoft’s market capitalization reached an all-time high of $2.887 trillion, as reported by LSEG data, while Apple’s market capitalization stood at $2.875 trillion based on data from a filing the previous day.

Apple’s stock had declined by 3% in 2024, primarily due to concerns regarding smartphone demand, despite a remarkable 48% surge in the previous year.

Conversely, Microsoft had seen a 3% increase year-to-date after an impressive 57% surge in 2023, largely fueled by its leadership in generative artificial intelligence, notably its investment in OpenAI, the creator of ChatGPT.

Apple’s market capitalization had peaked at $3.081 trillion on December 14, according to LSEG data.

Microsoft strategically integrated OpenAI’s technology into its suite of productivity software, revitalizing its cloud-computing business during the July-September quarter.

This AI leadership has also positioned Microsoft as a formidable challenger to Google’s dominance in web search.

Meanwhile, Apple faced subdued demand, including for its flagship product, the iPhone.

The demand slump in China, a crucial market, resulted from the country’s gradual economic recovery from the COVID-19 pandemic and competition from Huawei.

Apple is set to launch its Vision Pro mixed-reality headset on February 2 in the United States, marking its most significant product launch since the iPhone in 2007.

However, UBS estimated that Vision Pro sales would have a limited impact on Apple’s earnings per share in 2024.

Microsoft briefly held the title of the most valuable company over Apple a few times since 2018, most recently in 2021, when supply chain concerns related to the COVID-19 pandemic affected Apple’s stock price.

Both tech giants appeared relatively expensive in terms of their price-to-earnings ratios.

Apple’s forward PE ratio was 28, well above its 10-year average of 19, while Microsoft was trading at approximately 32 times forward earnings, exceeding its 10-year average of 24, according to LSEG data.

In Apple’s most recent quarterly report in November, the company provided a sales forecast for the holiday quarter that fell short of Wall Street expectations, mainly due to weak demand for iPads and wearables.

Analysts projected a 0.7% increase in Apple’s revenue to $117.9 billion for the December quarter. Microsoft, on the other hand, was expected to report a 16% revenue increase to $61.1 billion, driven by ongoing growth in its cloud business in the upcoming weeks. Apple was set to release its results on February 1.