Apple Edges Out Microsoft As The World’s Most Valuable Company

(CTN News) – For the first time since 2021, Microsoft (MSFT.O) became the world’s most valuable company on Friday after demand worries hit Apple (AAPL.O).

Microsoft gained 1% on Friday, while Apple rose 0.2%. Microsoft’s market capitalization now stands at $2.887 trillion, the highest ever, according to LSEG data. A filing on Thursday showed Apple’s market capitalization at $2.875 trillion.

In 2024, Apple has seen its shares drop 3% due to worries about smartphone demand after rallying 48% last year. With an investment in ChatGPT-maker OpenAI, Microsoft has gained 3% year-to-date after surging 57% in 2023.

In December, Apple’s market capitalization reached $3.081 trillion, according to LSEG.

As a result of integrating OpenAI’s technology into its productivity software, Microsoft saw its cloud-computing business rebound in the July-September quarter. With its AI lead, it has also created an opportunity to challenge Google’s dominance.

iPhone sales have been tepid. China, a major market, has seen demand slump due to a slow economic recovery following the COVID-19 pandemic, as well as a resurgent Huawei.

In the United States, the Vision Pro mixed-reality headset will go on sale on Feb. 2, marking Apple’s largest product launch since the iPhone. Earlier this week, UBS estimated that Vision Pro sales would be “relatively immaterial” to Apple’s earnings per share in 2024.

In 2021, when supply chain shortages related to the COVID-19 pandemic hit Apple’s stock price, Microsoft briefly overtook Apple as the most valuable company.

Taking into account their price to their expected earnings, both tech stocks appear relatively expensive. LSEG data shows Apple is trading at a forward PE of 28, well above its average of 19 over the past decade. The current price of Microsoft is around 32 times forward earnings, above its 10-year average of 24 times forward earnings.

Apple missed Wall Street expectations in its most recent quarterly report in November, due to weak demand for iPads and wearables.

The LSEG estimates that Apple’s December quarter revenue will be $117.9 billion. In its fourth quarter, revenue is expected to grow. Apple will report its results on Feb. 1.

It’s expected that Microsoft will report a 16% increase in revenue to $61.1 billion, driven by its cloud business.

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