Microsoft’s AI surge challenges Apple as iPhone demand wanes،
Big tech companies are always in a race, and we recently mentioned how Apple's downgrades allowed another tech player to grab the top spot among U.S. public companies. And guess what? As of late last week, that was indeed the case.
Reuters reports that Microsoft now holds the title of the world's most valuable technology company, surpassing Apple in terms of stock market value. The move came as concerns over iPhone demand impacted Apple shares, allowing Microsoft to claim the top spot for the first time since 2021.
Apple saw a slight increase of 0.2%, while Microsoft gained 1%. This pushed Microsoft's market capitalization to a record high of $2.887 billion, as reported by LSEG (London Stock Exchange Group) data. In comparison, Apple's market capitalization was $2.875 billion.
Concerns about a drop in demand for smartphones have caused Apple shares to fall 3% in 2024, following a 48% rise the previous year. Meanwhile, Microsoft saw a 3% rise this year, building on a remarkable 57% rise in 2023. This increase was fueled, in part, by Microsoft's leadership in generative artificial intelligence, notably an investment in OpenAI, the creator of ChatGPT.
Microsoft adding OpenAI technology to its productivity software has given a boost to its cloud computing business. Additionally, being a leader in AI allows Microsoft to overtake Google in web search.
Meanwhile, Apple is facing slowing demand, particularly for the iPhone, a major revenue generator. Demand in China, a key market for Apple, has fallen as the country's economy gradually recovers from the impact of the COVID-19 pandemic. To add to the challenge, Huawei's resurgence is eroding Apple's market share in the region.
Despite the upcoming launch of Apple's Vision Pro mixed reality headset on February 2, analysts expect its impact on earnings per share in 2024 to be relatively minimal.
This isn't the first time Microsoft has surpassed Apple in value; this also happened in 2021, due to supply chain issues during the pandemic. Apple also revealed in a recent report that holiday sales may not meet expectations, mainly because fewer people are buying iPads and wearable devices. The competition between Microsoft and Apple is constantly evolving, and currently, Microsoft is leading the way.
