Microsoft is on the verge of Eclipsing Apple as the World's Most Valuable Firm

By Consultants Review Team Thursday, 11 January 2024

Microsoft appears to be on track to surpass Apple as the world's most valuable firm. This development follows a recent drop in Apple's stock, which was fueled by concerns about iPhone sales.

Following a 48 percent surge last year, Apple's stock has dropped 4% in 2024. In comparison, Microsoft's stock has climbed only 2% this year, following a 57% increase in 2023. On Wednesday, Apple's stock fell 0.4% while Microsoft's surged 1.6%, closing the gap between the two computer titans even further. Apple's current market capitalization is $2.866 trillion, with Microsoft close behind at $2.837 trillion.

On December 14, Apple's market capitalization peaked at $3.081 trillion, while Microsoft's worth peaked at $2.844 trillion on November 28. However, according to a note from Jefferies analysts, iPhone sales in China fell by 30% in the first week of 2024, signaling increased competitive pressure from Huawei and other domestic rivals.

Apple's Vision Pro mixed-reality headset will be available in the United States on February 2nd, marking the company's biggest product launch since the iPhone in 2007. However, according to a UBS research released on Monday, Vision Pro sales will be "relatively immaterial" to Apple's earnings per share in 2024.

Microsoft has briefly eclipsed Apple as the most valuable corporation many times since 2018, most notably in 2021, when Apple's stock price was hit by concerns about supply chain problems connected to the COVID-19 pandemic.

In terms of price to expected earnings, both tech stocks look to be rather pricey. According to LSEG statistics, Apple is selling at a forward PE of 28, which is much higher than its 10-year average of 19. Microsoft is trading at roughly 31 times anticipated profits, which is higher than its 10-year average of 24.

Apple gave a sales projection for the holiday quarter in its most recent quarterly report in November, falling short of Wall Street expectations due to sluggish demand for iPads and wearables. Analysts expect that Apple's revenue will rise 0.7% to $117.9 billion in the December quarter, marking the company's first year-on-year revenue growth in four quarters. Apple is scheduled to release its earnings on February 1.

Meanwhile, analysts anticipate a 16% increase in revenue to $61.1 billion, led by continued expansion in Microsoft's cloud sector. Microsoft's earnings are expected in the following weeks.


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