Microsoft Briefly Surpasses Apple as Top Valued Firm Globally

On Thursday, Microsoft briefly overtook Apple as the world's most valuable company, capitalizing on its lead in generative artificial intelligence. Microsoft's 1.5% stock rise brought its market valuation to $2.888 trillion. Conversely, Apple, facing concerns about weakening iPhone sales and competition in China, dipped 0.3% to a market cap of $2.887 trillion, the first time since 2021 that it fell below Microsoft's valuation.

In January, Apple's stock slid 3.3%, contrasted by Microsoft's 1.8% rise. Rating downgrades and challenges in the Chinese market have fueled worries about Apple's iPhone sales. Additionally, regulatory scrutiny on its lucrative deal with Google as the default search engine on iOS poses a threat to Apple's services business.

In 2023, Microsoft aggressively deployed genAI-powered tools, benefiting from its partnership with ChatGPT-maker OpenAI. Despite a brief lead in 2021, concerns about COVID-driven supply chain issues impacted Apple's stock. Currently, Wall Street shows more optimism towards Microsoft, with no "sell" ratings and nearly 90% of brokerages recommending the stock. In contrast, Apple faces two "sell" ratings, with only two-thirds of analysts rating it as a "buy."

Both companies appear relatively expensive in terms of price to expected earnings. Apple trades at a forward PE of 28, exceeding its 10-year average of 19. Microsoft, with a forward PE around 31, is above its 10-year average of 24, according to LSEG data.