Microsoft has surpassed Apple to become the world’s most valuable company once again. This shift in market cap comes as Apple’s shares experience a weak start to the year, leading to concerns over demand. Microsoft has seen a sharp rise in its shares over the past year, driven by its investments in generative artificial intelligence through the company OpenAI. With Microsoft’s shares up 0.7% on Thursday, the company now has a market value of $2.865 trillion.
Both Microsoft and Apple have competed for the top spot in market value over the years. However, it was anticipated that Microsoft would overtake Apple due to its faster growth and more significant benefits from the generative AI revolution, according to D.A. Davidson analyst Gil Luria. Microsoft has leveraged OpenAI’s technology across its suite of productivity software, leading to a rebound in its cloud-computing business.
Meanwhile, Apple has been facing challenges with weakening demand, particularly for its flagship product, the iPhone, as well as increased competition from Huawei. The slow recovery of the Chinese economy has contributed to a slump in demand in the region, impacting Apple’s market share. Several analysts have downgraded Apple’s shares, citing concerns about its performance in the coming years.
Both Microsoft and Apple have high share price-to-earnings (PE) ratios, indicating their expensive valuation. Apple’s forward PE is 28, well above its 10-year average of 19, while Microsoft trades around 31 times forward earnings, surpassing its 10-year average of 24.
Despite these fluctuations, Microsoft’s overall positive performance has garnered favor from Wall Street, with no “sell” ratings and approximately 90% of brokerages recommending buying the stock. On the other hand, Apple has received two “sell” ratings, with only two-thirds of analysts advising to “buy” the stock.
This shift in market cap is not unprecedented, as Microsoft has briefly overtaken Apple as the most valuable company in the past, particularly during supply chain disruptions caused by the COVID-19 pandemic.
In conclusion, Microsoft’s strong performance in the AI sector and Apple’s challenges with demand have led to a temporary swap in market value. However, these rankings may continue to fluctuate as both tech giants navigate the changing landscape of the industry.
The source of the article is from the blog myshopsguide.com