Microsoft overtook Apple as the world’s most valuable company on Thursday, after the iPhone maker’s shares got off to a weak start in 2024 due to growing concerns about demand.
Shares of Redmond, Washington-based Microsoft rose 1.6 percent, giving it a market valuation of $2.875 billion, as its early advantage in the race to make money from artificial intelligence generative helped attract investors.
For its part, Apple shares fell 0.9 percent, with a market capitalization of $2.871 billion. It is the first time since 2021 that its valuation falls below that of Microsoft.
Shares of the Cupertino, California-based company have lost 3.3 percent in January through the latest close, versus Microsoft’s gain of 1.8 percent.
“It was inevitable that Microsoft would overtake Apple, as Microsoft is growing faster and has the most to benefit from the generative AI revolution,” said DA Davidson analyst Gil Luria.
The weakness in Apple’s stock comes after a series of rating downgrades that stoked concerns that sales of the iPhone, its biggest business, would remain weak, especially in top market China.
“China could be a drag on performance in the coming years,” brokerage Redburn Atlantic said in a note to clients on Wednesday, pointing to competition from a resurgence of Huawei and tensions between China and the United States that have increased pressure on Manzana.
The brokerage added that Apple’s services business, a bright spot in recent quarters, faces threats as regulators deepen scrutiny of a lucrative deal that makes Google the default search engine on iOS.
Apple shares, whose market capitalization peaked at $3.081 trillion on Dec. 14, ended last year with a gain of 48 percent.
That was less than the 57 percent rise for Microsoft, which aggressively deployed generative AI-powered tools in 2023 thanks to its partnership with OpenAI, maker of ChatGPT.
Microsoft has briefly overtaken Apple as the most valuable company a handful of times since 2018, most recently in 2021, when concerns about supply chain shortages fueled by the Covid-19 pandemic hit the stock price. from the iPhone manufacturer.
Currently, Wall Street is more positive on Microsoft. The company does not have any “sell” ratings and nearly 90 percent of brokers covering the company recommend buying the stock.
Apple has two “sell” ratings and only two-thirds of analysts covering the company rate it as a “buy.”
Both stocks look relatively expensive in terms of price relative to their expected earnings, a common method of valuing publicly traded companies.
Apple trades at 28 times expected earnings, well above its average of 19 times over the past 10 years, according to LSEG data. Microsoft trades at around 31 times forecast earnings, above its 10-year average of 24 times.
2024-01-11 18:42:50
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