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Microsoft briefly surpasses Apple in market valuation amid AI dominance

In a significant turn of events, Microsoft briefly overtook Apple) as the world’s most valuable company on Thursday for the first time since 2021. This shift occurred as concerns over demand impacted Apple’s shares at the start of the year.

D.A. Davidson analyst Gil Luria highlighted the inevitability of Microsoft surpassing Apple, noting, “It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution.”

Microsoft’s stock closed 0.5% higher, achieving a market valuation of $2.859 trillion, with a peak valuation of $2.903 trillion during the session. In contrast, Apple’s shares closed 0.3% lower, resulting in a market capitalisation of $2.886 trillion. The ongoing rivalry between Microsoft and Apple has seen fluctuations in their positions as the world’s most valuable companies.

Microsoft’s recent success is attributed to its strategic investment in ChatGPT-maker OpenAI, giving it an early lead in generative artificial intelligence. The incorporation of OpenAI’s technology across Microsoft’s suite of productivity software contributed to a rebound in its cloud-computing business in the July-September quarter.


Meanwhile, Apple has faced challenges with weakening demand, particularly for its flagship product, the iPhone. Factors such as the slow economic recovery in China and increased competition from Huawei have affected Apple’s market share and overall performance.

Redburn Atlantic, in a client note, expressed concerns about China being a potential drag on Apple’s performance in the coming years. At least three analysts covering Apple have downgraded their ratings since the beginning of 2024.

As of the latest close, Apple’s shares have fallen by 3.3% in January, contrasting with a 1.8% rise in Microsoft’s shares. Both companies have relatively high share price-to-earnings (PE) ratios, with Apple trading at a forward PE of 28 and Microsoft at around 31 times forward earnings.

Despite Apple’s market capitalization peaking at $3.081 trillion on Dec. 14, it concluded the previous year with a gain of 48%, slightly lower than Microsoft’s 57% rise. Presently, Wall Street shows more optimism towards Microsoft, with no “sell” ratings and nearly 90% of brokerages recommending the purchase of Microsoft stocks. In comparison, Apple has two “sell” ratings and two-thirds of analysts covering the company rate it as a “buy.” (from Reuters)


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