Microsoft has overtaken Apple as the world's most valuable company after the iPhone maker's worst start in years in 2024 due to growing demand concerns.
Microsoft stock rose 1.5% in early trading Thursday, giving the company founded by Bill Gates a market capitalization of $2.88 trillion.
The Redmond, Washington-based company's rapid growth has been attributed to its early lead in the generative artificial intelligence race, including a $1 billion investment in ChatGPT maker OpenAI in 2019.
Microsoft recently stepped up its bet on Sam Altman's AI company, pledging an additional $10 billion as part of a “multi-year” deal.
Meanwhile, Apple's market capitalization fell to $2.86 trillion after the stock fell another 1% on Thursday, down from its highest valuation of $3.081 trillion on Dec. 14, 2023.
The Cupertino, California-based company ended the year with a 48% annual profit.
The increase was lower than the 57% rise at Microsoft, which has been aggressively rolling out AI-powered tools over the past year, including its latest chatbot Copilot, formerly known as Microsoft's Bing Chat.
Microsoft has briefly topped Apple as the most valuable company several times since 2018, most recently in 2021 when concerns about supply chain shortages due to the coronavirus hit the iPhone maker's stock price.
Wall Street is more friendly towards Microsoft now.
The company does not have a sell rating, and almost 90% of brokerages that cover the company recommend the stock as a buy.
Apple has two sell ratings, and only two-thirds of analysts covering the company rate it a buy.
Both stocks appear relatively expensive based on price relative to expected earnings, a common method for evaluating listed companies.
According to LSEG data, Apple's forward P/E ratio is 28 times, well above the 19 times average over the past 10 years.
Microsoft's forward P/E ratio is approximately 31 times, which is higher than the 10-year average of 24 times.
with post wire
