Microsoft briefly surpassed Apple as the world’s most valuable public company on Thursday for the first time since 2021, underscoring a reversal in fortunes between the tech giants.
Microsoft shares rose 0.5% to close at a market valuation of $2.859 trillion, edging past Apple’s $2.886 trillion valuation as its stock slid 0.3%. The companies have jousted in recent years to be the world’s top firm by market capitalization.
Microsoft Rising on AI Bets
Microsoft’s stock has climbed sharply since 2022, fueled by growing excitement around its investments in futuristic artificial intelligence (AI) like ChatGPT-creator OpenAI.
It has infused OpenAI’s technology across its software suite, reviving growth at its cloud business. Analyst Gil Luria said Microsoft is poised to benefit more from the AI revolution.
In contrast, Apple has stumbled into 2023 amid mounting worries about cooling demand for its iPhone and other hardware that generates most of its profits. Its sales have also taken a hit in China where rival Huawei is staging a comeback.
Multiple Analyst Downgrades for Apple
At least three analysts have downgraded Apple’s stock since January 1, with brokerage Redburn warning of drag from China in coming years.
Shares of the iPhone maker have sunk 3.3% year-to-date, compared to a 1.8% rise for Microsoft. At current valuations, Microsoft trades at a higher 31x forward earnings versus 28x for Apple.
Microsoft first overtook Apple briefly in 2021 when supply chain issues had disrupted production of Apple devices. Currently, analysts are overwhelmingly bullish on Microsoft relative to Apple based on ratings and recommendations.
Going forward, Microsoft looks poised to capitalize on booming demand for enterprise AI, cloud services and software. In contrast, Apple faces tough sledding with consumers tightening budgets and its crucial Chinese market still recovering post-pandemic.
