Microsoft is on the verge of overtaking Apple as the most valuable stock
In the latest market developments, Apple is grappling with a decline in its stock value, raising concerns about the company’s position as the world’s most valuable, with Microsoft on the verge of overtaking.
The dip is attributed to worries surrounding iPhone sales, reflecting a 4 per cent drop in Apple’s shares since the beginning of 2024, following an impressive 48 per cent surge the previous year. In contrast, Microsoft has experienced a 2 per cent increase year-to-date, building on a substantial 57 per cent gain in 2023.
On Wednesday, Apple’s stock slipped by 0.4 per cent, while Microsoft saw a 1.6 per cent rise, further narrowing the gap between the two tech giants. As of now, Apple’s market value stands at $2.866 trillion, slightly ahead of Microsoft’s $2.837 trillion.
The decline is a notable shift from Apple’s peak market capitalization of $3.081 trillion on December 14, while Microsoft reached a high of $2.844 trillion on November 28.
Adding to the concerns, Jefferies analysts reported a 30 per cent drop in iPhone sales in China during the first week of 2024, signalling heightened competition from local rivals such as Huawei.
Despite the upcoming launch of Apple’s Vision Pro mixed-reality headset on February 2, touted as the company’s most significant product release since the iPhone in 2007, UBS analysts anticipate minimal impact on Apple’s earnings per share for 2024.
This is not the first time Microsoft has threatened Apple’s dominance, having briefly surpassed it as the most valuable company several times since 2018, notably in 2021 during the supply chain disruptions caused by the COVID-19 pandemic.
Analysts are expressing concerns about the relatively high valuation of both tech stocks based on their price-to-earnings ratios. Apple’s forward PE of 28 exceeds its 10-year average of 19, while Microsoft is trading at around 31 times forward earnings, surpassing its 10-year average of 24, according to LSEG data.
In its November quarterly report, Apple fell short of Wall Street expectations for the holiday quarter, primarily due to weak demand for iPads and wearables. Analysts predict a modest 0.7 per cent increase in revenue to $117.9 billion for the December quarter, marking Apple’s first year-on-year revenue growth in four quarters. The company is set to announce its results on February 1.
Meanwhile, analysts anticipate Microsoft to report a 16 per cent rise in revenue to $61.1 billion in the coming weeks, fueled by continued growth in its cloud business.
(With inputs from agencies)
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