Continues head to head between Apple and Microsoft for the throne of the company with the largest market capitalization in the world. In the last year the boom in artificial intelligence has led the software company to reduce the gap with the Cupertino company, but the two-way race is destined to last into the future.
Overtaking and counter-overtaking between Microsoft and Apple
In yesterday’s session Microsoft has momentarily overtaken Apple in terms of capitalization, but it failed to confirm the record at the end of the session. Microsoft shares closed up 0.5% at $384.63, a price which corresponds to a market cap of $2,858 billion. Apple, on the other hand, closed trading with a decline of 0.3% to $185.59, seeing its market value fall to $2.869 billion.
Il domination of the Cupertino company has now lasted since 2021, but in the last period the gap has narrowed considerably, bringing the two giants almost on the same level. Over the last year, Microsoft shares have gained around 64% and Apple 38%, losing ground after being the first company ever to reach 3 trillion market cap.
The two together constitute approximately 14% of the market value-weighted S&P 500 Index, which gained 20% in the same period. From 2019 to today, only Amazon and Saudi Aramco have been able to compete with these two giants, who today compete for world record.
Microsoft and Apple: different growth strategies
The competition between Microsoft and Apple dates back to the times of the war between Windows and Macintosh, but over time the two companies took divergent directions, focusing their activities on other lines of business.
Apple’s success has increasingly relied on the popularity ofiPhonewhose weight on turnover has gone from 2% in 20007 to 49% today, while the Redmond-based company has focused on the segment Intelligent Cloud, which generates 43% of the turnover. The share of revenue related to personal computers decreased in both cases: from 42% to 9% for Macs and from 41% to 24% for Windows PCs.
To diversify revenue Apple is trying to increase revenue from services, while Microsoft is focusing heavily on artificial intelligenceafter the investment in OpenAI a year ago, which allowed it to place itself in a privileged position towards the dominant megatrend of 2023.
Focus on upcoming quarterly reports
At the moment, the outlook seems more favorable for Microsoft than for Apple. The AI trend appears capable of maintaining the momentum of recent months, while the Cupertino company faces some headwinds, including a slowdown in iPhone demand and possible restrictions in China, amid tensions between Washington and Beijing. Caution also regarding the upcoming launch of Apple’s latest product, the Vision Pro, also due to the far from cheap price.
In the coming weeks the two companies will release their respective quarterly reports, from which useful indications will certainly emerge to understand more about the future of the two companies. Apple will release its accounts on February 1st, Microsoft has not yet announced the date of the Board of Directors meeting.
According to analysts’ estimates, the Microsoft’s revenue is expected to show a year-over-year increase of approximately 16% to $61 billion in the last quarter, while Modest growth is expected for Apple, under 1%at $118 billion.
Analysts’ opinions on Microsoft and Apple
Examining the analysts’ opinions on the two stocks, Apple collects 32 Buys, 16 Holds and 5 Sells (after the two downgrades at the beginning of 2024), with an average target price of $198.77 which implies a potential gain of 7.1%.
Microsoft instead it highlights 59 Buys, 6 Holds and no Sells, with an average target price of $418.82 which implies a hypothetical upside of 8.9%.
In any case, the two companies seem destined to share the top two places in the rankings in the future too global market capitalizationsbut the next strategic choices will probably determine which of the two will prevail in the long term.