After the latest earnings season, Microsoft surpassed Apple and once again topped the throne of the world‘s highest market capitalization company after more than a year. As of the close of US stocks on Friday, local time, Microsoft’s stock price rose 2.24%, and its market value reached US$2.49 trillion. At the same time, Apple’s stock price fell 1.82%, and its market value fell to $2.48 trillion.
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Relying on the Windows operating system and Office office suite, Microsoft once occupied the throne of the world‘s most valuable company for a long time in the late 1990s. During the Internet bubble, Microsoft’s market value reached a peak of $614.7 billion, and its market value was 40 times that of Apple.
But after the iPhone series hardware was launched, Apple surpassed Microsoft in market value in 2010. For the latter, due to the continued impact of the US government’s antitrust crackdowns and strategic mistakes such as missing the smartphone revolution, the stock price has fallen into a downturn in the past 10 years.
The last time Microsoft surpassed Apple in market value was in May last year, when a large number of investors flocked to technology growth stocks due to strong monetary and fiscal stimulus. However, due to the hardware dividend during the epidemic, Apple’s stock price rose rapidly, and the company’s market value reached $2 trillion for the first time after three months, regaining the crown.
The gap with AWS has narrowed
Market analysis believes that the outbreak of Microsoft’s cloud business and Apple’s supply chain restrictions are key factors for Microsoft’s market value to surpass again this time.
In terms of financial data, Microsoft’s first quarter financial report for the 2022 fiscal year announced on Tuesday was very strong: the company’s revenue reached 45.3 billion US dollars, a year-on-year increase of 22%, far exceeding market expectations.Revenue exceeded Wall Street’s average expectations for the 11th consecutive quarter.The company’s operating profit reached 20.2 billion, far exceeding market expectations of 18.6 billion.
In terms of business segmentation, all of Microsoft’s business performance was better than expected. The cloud business has become the company’s biggest revenue driver. The smart cloud business, including Azure public cloud, enterprise services, GitHub, etc., achieved revenue of 16.98 billion U.S. dollars, exceeding expectations of 165.8 U.S. dollars.With a year-on-year growth of 31%, the Azure cloud business grew at a staggering 50% this quarter.
In terms of cloud business competitors, the gap between Microsoft and the industry leader Amazon has been substantially narrowed.
Calculated based on the income of the past 12 months,The current scale of Microsoft Azure cloud computing services has reached 61% of the AWS business, compared with 30% just 5 years ago; In the past eight quarters, the year-on-year growth rate of Microsoft’s cloud business averaged 34%, while Amazon AWS averaged 32%.
Apple “lack of core”
For Apple, due to supply chain constraints, Apple’s quarterly revenue fell below market expectations for the first time since May 2017.
The financial report shows that Apple recorded revenue of 83.36 billion U.S. dollars in the closing quarter of fiscal 2021, an increase of 29% year-on-year. It was the highest in company history in the September quarter, but it was lower than analysts’ expectations of 84.69 billion U.S. dollars, an increase of 2.4% from the previous quarter.
For the weaker-than-expected earnings report, Apple CEO Cook attributed the reason to the supply constraints of iPhone, iPad and Mac exceeding expectations. During the conference call, Cook said,The company’s losses due to supply chain problems amounted to $6 billion.
Cook said that chip shortages are the main cause of supply chain shortages, and chip supply problems occur in “legacy nodes” or older chips. At the same time, the epidemic in Southeast Asian countries has had the impact of extensive work stoppages.
To make matters worse, Apple expects that supply chain constraints will have a greater impact on the critical holiday shopping season at the end of the year.According to past experience, shopping demand at the end of the year tends to push up company performance.
Cook said on the conference call that Apple expects that by the end of the first fiscal quarter (end-of-year shopping season), the revenue impact of supply constraints will exceed the $6 billion in the fourth fiscal quarter. According to the current trend of supply chain restriction, Apple may have to wait a while longer if its market value surpasses Microsoft.
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