Microsoft momentarily surpassed Apple as the world’s most valuable company, marking a significant shift in market dynamics. This change, occurring for the first time since 2021, was driven by contrasting fortunes of the two tech giants in early 2024.
Microsoft’s strategic investment in OpenAI, the creator of ChatGPT, has been a crucial factor. This investment has allowed Microsoft to take an early lead in the rapidly evolving field of generative artificial intelligence, which has significantly bolstered investor confidence.
Microsoft has integrated OpenAI’s technology into its suite of productivity software, enhancing its cloud-computing business and appealing to a broader range of customers seeking advanced AI solutions.
Apple has been dealing with a decrease in demand, particularly in China, which is a key market for the company. The slow recovery of China’s economy post-pandemic and increasing competition from rivals like Huawei have impacted Apple’s sales.
The start of 2024 saw a decline in analyst confidence, with at least three of the 41 analysts covering Apple lowering their ratings. This reflects growing concerns about the company’s near-term prospects.
Microsoft’s shares rose, closing 0.5% higher, which briefly pushed its market valuation to $2.903 trillion. In contrast, Apple’s shares closed 0.3% lower, with its market capitalization at $2.886 trillion.
Experts like Gil Luria from D.A. Davidson see Microsoft’s overtaking as inevitable, citing the company’s faster growth and significant leverage from the AI revolution.
Brokerage firms like Redburn Atlantic have downgraded Apple’s shares to “neutral,” citing concerns like the impact of China’s economic situation.
Microsoft and Apple have alternated as the most valuable company several times since 2018. In 2021, similar shifts occurred due to concerns about supply chain issues impacting Apple.
Wall Street is generally more favorable towards Microsoft, with no “sell” ratings and nearly 90% of brokerages recommending buying its stock.