Apple has lost its position as the most valuable company in the world after a long time
Microsoft overtook Apple as the world’s most valuable company on Thursday after the iPhone maker’s shares got off to a weak start to 2024 amid growing concerns about demand.
Shares in Redmond, Wash.-based Microsoft rose 1.6%, giving it a market value of $2.875 trillion, as its early lead in the race to make money from generative artificial intelligence (AI) helped attract investors.
Apple fell 0.9% with a market capitalization of $2.871 trillion – the first time since 2021 that its value fell below Microsoft’s.
Shares of the Cupertino, California-based company fell 3.3% in January since the last close, compared with Microsoft’s 1.8% rise.
“It was inevitable that Microsoft would overtake Apple because Microsoft is growing faster and benefits more from the generative AI revolution,” DA Davidson analyst Gil Luria told Investor.me.
The weakness in Apple’s shares followed a series of downgrades that fueled concerns that sales of the iPhone, its most important product, would remain weak, especially in the big market of China.
“China could be a drag on performance in the coming years,” brokerage Redburn Atlantic said in a client note on Wednesday, pointing to competition from China’s Huawei and tensions between China and the US that have increased pressure on Apple.
The brokerage added that Apple’s services business — a bright spot in recent quarters — faces threats as regulators deepen their scrutiny of the lucrative business that makes Google the default search engine on iOS.
Shares of Apple, whose market capitalization peaked at $3.081 trillion on December 14, ended last year up 48%. That’s still lower than the 57% growth achieved by Microsoft, which aggressively introduced genAI tools in 2023 thanks to a tie-up with OpenAI, creator of ChatGPT.
Microsoft briefly took the lead over Apple as the most valuable company several times since 2018, most recently in 2021 when concerns about supply chain shortages caused by COVID-19 hit the iPhone maker’s share price.
Right now, Wall Street is more positive about Microsoft. The company does not have a “sell” rating and nearly 90% of brokerages that cover the company recommend buying its stock.
Apple has two “sell” ratings, and only two-thirds of analysts who cover the company rate it a “buy.”
Both stocks look relatively expensive relative to their expected earnings, which is a common method of valuing publicly traded companies.
