Microsoft beats Apple to become world's biggest company in terms of value

Web Desk
Microsoft logo is seen on the smartphone in front of displayed Apple logo in this illustration taken, July 26, 2021. —Reuters
Microsoft logo is seen on the smartphone in front of displayed Apple logo in this illustration taken, July 26, 2021. —Reuters

Microsoft has surged ahead of Apple to claim the title of the world's most valuable company after Apple's shares faced a lacklustre start to 2024, marked by concerns over weakening product demand.

Due to its early strides in generative artificial intelligence, Microsoft's rise propelled its market valuation to $2.875 trillion, outpacing Apple for the first time since 2021.

The latest data shows Microsoft's shares enjoying a 1.6% increase, reflecting investors' enthusiasm for the company's advancements in generative AI. 

On the other hand, Apple experienced a 0.9% decline, resulting in a market capitalisation of $2.871 trillion. Analysts note that Microsoft's faster growth and substantial gains from the generative AI revolution played a pivotal role in this historic shift.

DA Davidson analyst Gil Luria highlighted the inevitability of Microsoft's triumph, stating, "Microsoft is growing faster and has more to benefit from the generative AI revolution." Apple's recent struggles are evident in a 3.3% slide in its stock during January, contrasting with Microsoft's 1.8% rise.

Apple's challenges include rating downgrades, raising concerns about the iPhone's sales outlook, particularly in the crucial Chinese market. Redburn Atlantic noted that China's dynamics, heightened Sino-US tensions and competition from Huawei pose potential obstacles to Apple's performance.

Furthermore, scrutiny from regulators on Apple's services business, particularly the Google search engine deal on iOS, adds pressure. Despite ending 2023 with a 48% gain, Apple's recent hurdles have contributed to Microsoft's ascendancy.

Microsoft's foray into generative AI, bolstered by its collaboration with OpenAI for ChatGPT-powered tools, has garnered favour on Wall Street.

The company's positive outlook is evident, with no "sell" ratings and nearly 90% of brokerages recommending a buy. In contrast, Apple faces a less optimistic scenario, with two "sell" ratings and only two-thirds of analysts endorsing the stock.

As both tech giants trade at relatively high price-to-earnings ratios, Apple at 28 and Microsoft at 31, the market landscape hints at an evolving dynamic where Microsoft's momentum could reshape the longstanding narrative of tech supremacy.