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A few days ago we wrote about how 2024 was a year full of pitfalls for Apple. And judging by how the Cupertino giant has started this new year on Wall Street, the critical issues seem to have already emerged.
After Barclays, Apple received its second downgrade in a week. Piper Sandler & Co cut its rating on the Tim Cook-led company from “overweight” to “neutral,” citing the weak macroeconomic environment in China that will weigh on iPhone demand. A revision that further aggravated Apple’s already difficult week on Wall Street.
Since the beginning of the year, in fact, the stock of the most capitalized company in the world has lost around 5%, burning around 170 billion dollars of market cap. A trend that worries investors, after Apple’s stock had gained around 50% in 2023, breaking the wall of 3 trillion dollars in capitalisation. Today, however, the leadership on Wall Street (which has lasted for years) is undermined by Microsoft. The two companies are divided by “just” 60 billion in capitalisation, an absolutely small figure for giants with trillion-dollar market caps.
And after all, the last time Apple lost the queen’s scepter on the New York Stock Exchange dates back to 2019, when Microsoft took the lead for a few months. At the time, both companies were trading at $1 trillion in market caps. Today they have tripled that value, although the prospects now seem different. While Apple remains anchored to iPhone sales (which make up more than 50% of its annual turnover), Microsoft is launched full speed into the generative artificial intelligence business, with investments in ChatGPT and the development of Copilot. Two quite distant interpretations, in today’s view of the market. And this is why Microsoft seems close to overtaking.
Also because, as we said at the beginning, Apple has received its second downgrade in a week. “We are concerned about mobile phone inventories in the first half of 2024 and believe unit sales growth rates have peaked… The deteriorating macroeconomic environment in China may also weigh on the mobile phone business,” he wrote Harsh Kumar, analyst at Piper Sandler, in a note to clients.