Jeff Sica, founder of Circled Squared Investments, talks about whether Microsoft can replace Apple as Varney & Co's largest company by market capitalization.
Microsoft briefly overtook Apple on Thursday to become the world's most valuable company for the first time since 2021, after the iPhone maker's stock got off to a weak start to the year due to growing concerns about demand.
Microsoft's stock price has soared since last year, thanks to the company's early lead in generative artificial intelligence through its investment in ChatGPT maker OpenAI. It rose 0.7% on Thursday, giving Microsoft a market capitalization of $2.865 trillion.
On Thursday, Microsoft's market capitalization exceeded Apple's for the first time since 2021. (Reuters/Dado Ruvic/Illustration/File Photo/Reuters Photo)
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| MSFT | Microsoft Corporation | 384.63 | +1.86 | +0.49% |
| AAPL | Apple. | 185.59 | -0.60 | -0.32% |
Shares rose as much as 2% in early trading, and Microsoft was at one point valued at $2.903 trillion.
Apple stock fell 0.9%, giving the company a market capitalization of $2.871 trillion. Microsoft and Apple have been competing for the top spot for years.
Microsoft adds new AI CoPilot button to Windows keyboard in first device change in 30 years
DA Davidson analyst Gil Luria said, “It was inevitable that Microsoft would overtake Apple because it is growing faster and benefits more from the generative AI revolution.” .
Microsoft is incorporating OpenAI's technology into its suite of productivity software, which helped fuel a recovery in its cloud computing business in the July-September quarter.
Microsoft CEO Satya Nadella speaks at the Microsoft Product Event in New York, USA, on Wednesday, October 2, 2019. (Photographer: Mark Kauzlarich/Bloomberg via Getty Images / Getty Images)
Meanwhile, Apple is grappling with declining demand for products such as the iPhone, which is its biggest cash cow. Demand in China, a major market, has slumped as the country's economy slowly recovers from the pandemic and a resurgent Huawei slowly steals market share.
Brokerage firm Redburn Atlantic downgraded Apple's stock to “neutral,” saying in a client note on Wednesday that “China could be a drag on performance for years to come.”
At least three of the 41 analysts covering Apple have downgraded their ratings since early 2024.
APPLE VISION PRO headset: release date and price revealed
The Cupertino, California-based company is down 3.3% as of January's last close, while Microsoft is up 1.8%.
Both stocks are expensive based on price-to-earnings ratios, a common method for valuing publicly traded 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.
A close-up of the blue logo on a billboard with the corporate building facade in the background, near Apple Computer's headquarters in Silicon Valley, on August 26, 2018 in Cupertino, California. ((Photo courtesy: Smith Collection/Gado/Getty Images) / Getty Images)
Apple stock, whose market capitalization peaked at $3.081 trillion on Dec. 14, ended last year up 48%. This was lower than the 57% increase recorded by Microsoft.
Microsoft has briefly led Apple as the most valuable company several times since 2018, including in 2021 when concerns about supply chain shortages due to the coronavirus hit the iPhone maker's stock price. Also included.
CLICK HERE TO GET FOX BUSINESS ON THE GO
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 the analysts covering the company rate it a buy.
