Microsoft surpassed Apple as the world’s most valuable IT business after a sluggish start to 2024 due to demand fears. Microsoft’s AI product and early lead in generative AI profit attracted investors.
Microsoft (MSFT.O) surpassed Apple (AAPL.O) as the most valuable IT company on Thursday. After Apple’s shares fell in 2024 due to demand fears, Washington-based Microsoft became the world’s most valuable firm.
Microsoft’s AI helps IT giant
Microsoft rose 1.6% to $2.875 trillion in market value. Microsoft’s early advantage in generative AI profit attracted investors.
Apple’s market cap was $2.871 trillion, down 0.9%. Apple’s worth fell below Microsoft’s for the first time since 2021. At last close, Cupertino, California-based company’s shares had fallen 3.3% in January, while Microsoft’s rose 1.8%.
What analyst said
Gil Luria of DA Davidson remarked, “It was inevitable that Microsoft would overtake Apple since the former is growing faster and has more to benefit from the generative AI revolution.”
After several rating downgrades, Apple shares fell as concerns grew that iPhone sales, its greatest cash cow, would remain poor, especially in China.
“China could be a drag on performance over the coming years,” brokerage Redburn Atlantic wrote in a client note on Wednesday, citing Huawei’s rising popularity and Sino-U.S. tensions.
The brokerage added Apple’s services sector, a bright light in recent quarters, faces dangers as regulators scrutinize a lucrative contract that makes Google iOS’ default search engine.
After peaking at $3.081 trillion on December 14, Apple shares rose 48% last year.
That was lower than Microsoft’s 57% rise in 2023, when it aggressively put out genAI-powered tools with ChatGPT-maker OpenAI.
Microsoft has briefly surpassed Apple as the most valuable firm several times since 2018, most notably in 2021 when COVID-19 supply chain issues affected the iPhone maker’s stock price.
Microsoft is gaining favor on Wall Street. Nearly 90% of brokerages recommend buying the stock, which has no “sell” rating.
Two experts rank Apple “sell” while two-thirds rate it “buy”. Both stocks appear costly based on their predicted earnings, a popular valuation measure for publicly traded corporations.
Conclusion
Microsoft surpassed Apple as the world’s most valuable IT business after a sluggish start to 2024 due to demand fears. Microsoft’s AI product and early lead in generative AI profit attracted investors. Apple’s market cap fell 0.9%, the first time since 2021 that it fell below Microsoft’s. After several rating downgrades, Apple shares fell as concerns grew that iPhone sales, its greatest cash cow, would remain poor, especially in China. Apple’s services sector is threatened by regulators’ examination of a lucrative contract that makes Google iOS’s default search engine. Microsoft has briefly surpassed Apple as the most valuable firm several times since 2018, most notably in 2021 when COVID-19 supply chain issues affected the iPhone maker’s stock price.
