Microsoft Surpasses Apple to Become World’s Most Valuable Company

Microsoft has surpassed Apple to become the world’s most valuable company, capitalizing on Apple’s sluggish start in 2024 attributed to concerns about weakening demand. Microsoft’s shares rose 1.5%, reaching a market valuation of $2.888 trillion, driven by its early success in capitalizing on generative artificial intelligence.

Conversely, Apple experienced a 0.3% decline, with a market capitalization of $2.887 trillion, marking the first time since 2021 that its valuation has fallen below that of Microsoft. Apple’s stock has declined by 3.3% in January, while Microsoft has seen a 1.8% rise during the same period.

The downturn in Apple’s performance is linked to several rating downgrades, raising apprehensions about the iPhone’s sales, particularly in the crucial Chinese market. Concerns about competition from Huawei and escalating Sino-U.S. tensions have contributed to the decline. Additionally, Apple’s services business faces regulatory scrutiny over a lucrative deal with Google as the default search engine on iOS.

Microsoft’s robust performance in 2023, fueled by the strategic integration of genAI-powered tools through its collaboration with OpenAI, has contributed to its current lead. Although Microsoft has briefly surpassed Apple in valuation before, the current trend reflects Wall Street’s optimism toward Microsoft, as evidenced by no “sell” ratings and strong buy recommendations from nearly 90% of brokerages covering the company.

On the other hand, Apple, which concluded 2023 with a 48% gain in stock value, faces challenges with only two-thirds of analysts recommending a “buy.” Both companies are perceived as relatively expensive in terms of their price-to-earnings ratios, with Apple trading at a forward PE of 28, above its 10-year average of 19, and Microsoft at around 31 times forward earnings, surpassing its 10-year average of 24, according to LSEG data.