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Microsoft Competes Head-On with Apple for Title of World’s Most Valuable Company

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Due to recent market swings, Apple, the titan of Silicon Valley, is facing a serious threat to its ranking as the world’s top firm, which is creating concerns about iPhone sales.

In sharp juxtaposition, Microsoft is consistently making progress, reducing the distance between these two tech powerhouses.

The first few weeks of 2024 have seen Apple’s shares tumble by 4%, casting a shadow over its remarkable 48% rally in the previous year. In contrast, Microsoft has experienced a 2% increase year-to-date, following an impressive surge of 57% in 2023.

Apple’s stock decline on Wednesday, coupled with Microsoft’s 1.6% gain, has further diminished the iPhone maker’s lead. Apple’s market value now stands at $2.866 trillion compared to Microsoft’s $2.837 trillion.

The concerns surrounding Apple stem from a noticeable decline in iPhone sales, particularly in China, where sales dropped by 30% in the first week of 2024. Analysts at Jefferies attribute this decline to heightened competition from domestic rivals, notably Huawei.

Anticipation surrounds Apple’s upcoming product launch the Vision Pro mixed-reality headset, slated to hit the US market on February 2. However, a UBS report suggests that the headset’s sales impact on Apple’s earnings in 2024 may be relatively modest.

Microsoft’s Ongoing Challenge to Surpass Apple

microsoft-competes-head-on-with-apple-for-title-of-world's-most-valuable-company
Due to recent market swings, Apple, the titan of Silicon Valley, is facing a serious threat to its ranking as the world’s top firm, which is creating concerns about iPhone sales.

Microsoft, with its consistent growth, has posed a continuous challenge to surpass Apple in market capitalization. Previous instances occurred in 2018 and 2021, the latter linked to concerns about supply chain limitations during the Covid-19 epidemic.

Both companies are considered relatively expensive by the market, trading at forward price-to-earnings ratios above their 10-year averages. Apple’s forward PE is 28, significantly higher than its 10-year average of 19, while Microsoft’s ratio stands at around 31, surpassing its 10-year average of 24.

Apple’s recent sales forecast, falling short of Wall Street expectations, and weak demand for iPads and wearables highlighted in its November quarterly report, have contributed to current market concerns. 

Analysts project a modest 0.7% increase in Apple’s revenue to $117.9 billion for the December quarter, marking its first year-on-year revenue rise in four quarters.

In contrast, Microsoft is expected to report a robust 16% revenue increase to $61.1 billion, buoyed by continuous growth in its cloud business. 

The tech world awaits the companies’ upcoming earnings reports, with Apple scheduled to release its results on February 1.

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