Microsoft edges out Apple as world's most valuable company

Microsoft's stock market value ended a trading session higher than Apple's for the first time since 2021 on Friday (Jan 12), making it the world's most valuable company as worries about demand hit the iPhone maker's shares.

Apple crept up 0.2 per cent on Friday, while Microsoft added one per cent.

With that, Microsoft's market capitalisation stood at US$2.887 trillion (S$3.843 trillion), its highest ever, according to LSEG data.

Apple's market capitalisation was US$2.875 trillion, calculated with data in a filing on Thursday.

Worries about smartphone demand have pushed Apple's shares down three per cent so far in 2024 after rallying 48 per cent last year.

Microsoft is up about three per cent year to date after surging 57 per cent in 2023 in a rally driven in part by its lead in generative artificial intelligence through an investment in ChatGPT-maker OpenAI.

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Apple's market capitalisation peaked at US$3.081 trillion on Dec 14, according to LSEG.

Microsoft has incorporated OpenAI's technology across its suite of productivity software, a move that helped spark a rebound in its cloud-computing business in the July-September quarter.

Its AI lead has also created an opportunity to challenge Google's dominance of web search.

Apple, meanwhile, has been grappling with tepid demand, including for the iPhone, its cash cow.

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the Covid-19 pandemic and a resurgent Huawei erodes its market share.

Sales of Apple's Vision Pro mixed-reality headset start on Feb 2 in the US, marking Apple's biggest product launch since the iPhone in 2007.

However, UBS in a report this week estimated that Vision Pro sales would be "relatively immaterial" to Apple's earnings per share in 2024.

A handful of times since 2018, Microsoft has briefly taken the lead over Apple as the most valuable company, most recently in 2021, when concerns about supply chain shortages related to the Covid-19 pandemic hit the iPhone maker's stock price.

Both tech stocks look relatively expensive in terms of price to their expected earnings, a common method of valuing publicly listed companies.

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Apple is trading at a forward PE of 28, well above its average of 19 over the past 10 years, according to LSEG data.

Microsoft is trading around 32 times forward earnings, above its 10-year average of 24.

In its most recent quarterly report in November, Apple gave a sales forecast for the holiday quarter that missed Wall Street expectations, hurt by weak demand for iPads and wearables.

Analysts on average see Apple posting revenue up 0.7 per cent to US$117.9 billion for the December quarter, according to LSEG.

That would mark its first year-on-year revenue increase in four quarters. Apple reports its results on Feb 1.

Analysts see Microsoft reporting a 16 per cent increase in revenue to US$61.1 billion, lifted by ongoing growth in its cloud business when it reports in the coming weeks.

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