Apple faces a potential challenge from Microsoft for the title of the world’s most valuable company as concerns about iPhone sales have led to a recent decline in Apple share price.
After a 48% surge in 2023, Apple shares fell 4% in 2024 so far on worries over smartphone demand. In contrast, Microsoft share price gained 2% this year after a 57% surge in 2023.
On Wednesday (10th Jan 2024), Apple’s stock dropped by 0.4%, while Microsoft gained 1.6%, narrowing the margin between the value of two companies. Currently, Apple’s market value stands at $2.866 trillion, slightly ahead of Microsoft’s $2.837 trillion. Apple’s market cap reached its peak at $3.081 trillion on December 14, while Microsoft's value reached $2.844 trillion on November 28.
Microsoft has briefly taken the lead over Apple as the most valuable company a handful of times since 2018. Most recently in 2021, it overtook Apple when concerns about supply chain shortages related to the COVID-19 pandemic hit the iPhone maker's stock price.
Analysts believe both tech stocks look relatively expensive in terms of price to their expected earnings. 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 31 times forward earnings, above its 10-year average of 24, Reuters reported.
Apple has been facing a slowdown in iPhone demand in China as the sales dropped 30% in the first week of 2024, amid signs of growing competitive pressures from Huawei and other domestic rivals, as per reports.
In its 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 expect Apple to see revenue growth of 0.7% to $117.9 billion for the December quarter, according to LSEG. That would mark its first year-on-year revenue increase in four quarters. Apple will report its results on February 1.
Microsoft is estimated to report a 16% increase in revenue to $61.1 billion, lifted by ongoing growth in its cloud business when it reports in the coming weeks.
