The year 2024 had a bad start for iPhone maker Apple amid declining sales and demand-related concerns. Meanwhile, on Thursday, Microsoft has overtaken Apple to become the world’s most valuable company.
According to Reuters news published on NDTV, Microsoft shares increased by 1.5% on Thursday, taking its market cap to $ 2.888 trillion.
Microsoft’s early lead in the race to make money from Artificial Intelligence (AI) has attracted investors and the results are in.
Whereas Apple is 0.3% below Microsoft with a market cap of Rs 2.887 trillion. This is the first time since 2021 that its valuation has fallen below Microsoft.
The stock of the California-based company has fallen 3.3% so far in 11 days of the new year 2024, while Microsoft has increased by 1.8%.
Apple faces challenge from China
iPhone sales have been declining for a long time. Especially the biggest decline is being recorded in China. Since China has a major share in global sales, Apple is facing losses globally due to sales down in China.
Brokerage Redburn Atlantic said in a note on Wednesday, ‘The company’s performance in China may decline in the coming years. Pointing to US-China tensions and Huawei Mate 60 series vs iPhone 15 competition, the brokerage said that pressure on Apple has increased.
Apple lagging behind in growth
Shares of Apple, whose market cap peaked at $3.081 trillion on December 14, ended last year up 48%.
This was less than the 57% growth of Microsoft, which launched and dominated the market with generative AI-powered tools in 2023 thanks to a tie-up with ChatGPT maker OpenAI.
The company has already made progress
Microsoft has overtaken Apple as the most valuable company several times since 2018. The most recent example is from 2021, when the shares of the iPhone maker company went down due to the supply chain being affected due to Covid.
At present, Wall Street has become more positive about Microsoft. No one has given ‘SELL’ rating on Microsoft and 90% of the brokerages tracking the company have kept ‘BUY’ rating on the stock.
Apple has two ‘SELL’ ratings and only two-thirds of the analysts tracking the company have given it a ‘BUY’ rating.
Microsoft in strong position
Both the stocks look expensive in terms of PE or price per share, which is a common method of evaluating publicly listed companies.
According to LSEG data, Apple is trading at a Forward PE of 28, which is well above the average of 19 over the last 10 years. At the same time, Microsoft is trading at about 31 times forward earnings, above its 10-year average of 24.
