Apple has recently seen a shift in its market standing, losing its position as the world’s most valuable company to Microsoft. However, it’s simultaneously gearing up for a significant product launch that could open new doors.
Key Highlights:
- Apple’s shares decreased by 4% in 2024, following a 48% surge the previous year.
- Microsoft’s shares increased by 2% in 2024, adding to a 57% rise in 2023.
- Apple’s market value is currently at $2.866 trillion, while Microsoft is at $2.837 trillion.
- Apple to launch Vision Pro mixed-reality headset, a major release since the iPhone.
Apple’s Market Shift
Apple’s recent 4% decrease in shares contrasts starkly with its 48% surge in the previous year. This downturn was primarily driven by a 30% drop in iPhone sales in China during the first week of 2024, as per Jefferies analysts. This decline is attributed to increased competition from Huawei and other domestic brands.
Apple’s Struggle and Microsoft’s Rise
In early 2024, Apple’s market cap experienced a decline due to a decrease in iPhone sales, particularly in China. This was exacerbated by the increasing competition from Chinese manufacturers like Huawei. Microsoft, meanwhile, saw a rise in its market value, attributed to its deep focus on generative artificial intelligence (AI), a sector that has garnered significant interest and investment.
The Dynamics of the Tech Market
These developments reflect the dynamic nature of the tech market, where leadership positions can shift rapidly. Both Apple and Microsoft have experienced fluctuations in their market values over the years, influenced by product launches, market trends, and global economic factors.
Microsoft’s Rise
In contrast, Microsoft has experienced a 2% increase in its shares in 2024, building on a significant 57% surge in 2023. This growth has enabled Microsoft to narrow the gap with Apple in terms of market value, with Apple currently valued at $2.866 trillion and Microsoft close behind at $2.837 trillion.
Apple’s New Horizon: Vision Pro
Despite the market fluctuations, Apple is on the brink of launching its Vision Pro mixed-reality headset on February 2 in the United States. This product is Apple’s most significant launch since the iPhone in 2007. However, a UBS report suggests that the Vision Pro’s sales will only have a minor impact on Apple’s earnings per share in 2024.
Historical Context
This is not the first time Microsoft has overtaken Apple in market value. Since 2018, Microsoft has intermittently surpassed Apple, notably in 2021 due to supply chain issues related to the Covid-19 pandemic. Both companies’ stocks are currently considered expensive in terms of their price-to-expected-earnings ratios.
Apple’s Financial Outlook
In its latest quarterly report, Apple’s sales forecast for the holiday quarter fell short of expectations, mainly due to weak demand for iPads and wearables. Analysts anticipate a modest revenue increase of 0.7% to $117.9 billion for the December quarter, marking Apple’s first year-on-year revenue increase in four quarters. Apple is scheduled to report its results on February 1.
While Apple has ceded its crown as the world’s most valuable company to Microsoft, it is not standing still. The upcoming launch of the Vision Pro headset marks a new venture for Apple into the realm of mixed reality, potentially opening up new markets and opportunities for innovation.
