Microsoft briefly overtook Apple as the world’s most valuable company, with its market capitalization reaching as much as $2.903 trillion on January 11, 2024. This surge was attributed to Microsoft’s advancements in generative AI, which have been driving up its stock price. The company’s stock jumped as much as 2%, while Apple’s market cap dropped to $2.871 trillion after shares fell 0.9%, marking the first time since 2021 that Apple’s value dropped below that of Microsoft. Microsoft’s revenue growth of 7% to $52.9 billion, driven by the integration of AI technology into its cloud computing business, also contributed to the surge in its stock price.
This surge was driven by several factors:
- Concerns about iPhone sales: Apple’s stock experienced a 4% drop in 2024 due to worries about smartphone demand, while Microsoft’s stock price increased by about 2% year to date and 57% in 2023.
- Product launches: Apple’s market capitalization peaked at $3.081 trillion on December 14, 2023, marking the company’s biggest product launch since the iPhone in 2007. However, UBS estimated that the Vision Pro sales would be “relatively immaterial” to Apple’s overall performance.
- Stock performance: Apple’s stock market value is now at $2.866 trillion, while Microsoft’s value reached as much as $2.844 trillion. Both tech stocks look relatively expensive in terms of price to their expected earnings, a common method of valuing publicly listed companies.
Outlook for Microsoft’s Future
The outlook for Microsoft’s future is positive, as the company is expected to report a 16% increase in revenue to $61.1 billion when it reports its results in the coming weeks. This growth is primarily driven by the ongoing expansion of its cloud business. Additionally, some analysts predict that Apple and other tech giants could join the $3 trillion market cap club in the near future.
On the other hand, concerns about Apple’s iPhone sales led to a decline in its stock, with rating firms downgrading Apple stock and wiping around $162 billion off its market capitalization in 2024 alone.
In conclusion, Microsoft’s brief surge in market value was fueled by its advancements in generative AI and strong financial performance, while concerns about Apple’s iPhone sales impacted its stock performance. The future outlook for Microsoft appears promising, with its focus on AI and cloud computing expected to drive further growth and market success.