Microsoft’s Market Cap Lead Over Apple Widens

by Warren Seah

Microsoft Corp. continues to pull away from Apple Inc. in terms of market capitalization — so much so that the gap between them is the widest it’s been in over two decades.

Current Market Capitalization Figures

Based on intraday action, Microsoft has a $3.063 trillion market cap Friday, while Apple’s clocks in at $2.754 trillion. If the corresponding stock-market action carries through to the close, that would translate to a $309.4 billion margin, the largest between these two companies since Oct. 21, 2003, according to Dow Jones Market Data.

Historical Perspective

Of course, the picture was much different back in 2003, when the $312.1 billion spread between the two tech players was almost as large as Microsoft’s entire valuation. Microsoft commanded a $320.2 billion market value on Oct. 21, 2003, while Apple’s valuation was only $8.1 billion.

Apple’s Evolution

Apple’s business is of course much more advanced now, but investors haven’t been too excited about it this year, with the stock off about 8% so far in 2024.

The company returned to year-over-year revenue growth in its latest quarter after four quarters of declines but suggested revenue could fall again in the ongoing quarter. Some on Wall Street have questioned whether Apple’s innovative ways are waning.

Drastic Market-Cap Shift

The market-cap gap between Apple and Microsoft is especially staggering considering how far ahead Apple was just under a year and a half ago. Apple was worth $719.2 billion more than Microsoft on Oct. 28, 2022, according to Dow Jones Market Data.

Apple’s Stock Performance in 2024

The decline in Apple shares to start 2024 is notable, especially after the stock surged 48% in the previous year. On the other hand, Microsoft has been able to sustain its momentum from last year, with stock advancements of 57% and an additional 10% growth so far this year.

Microsoft’s Position in the AI Market

Microsoft is perceived as a strong player in the hot artificial-intelligence market by Wall Street. The company’s Azure cloud-computing business has been benefiting from growing customer interest in AI workloads. Additionally, Microsoft has been integrating AI functions into its own software products and has made strategic investments in OpenAI.

Apple’s Use of AI Technology

Apple has a long history of leveraging AI technology across its business, most notably in features like the Siri voice assistant and the iPhone’s advanced photo-recognition capabilities. However, Apple’s management has maintained a relatively low profile on AI discussions during recent earnings calls, contrasting with other corporate executives eager to showcase their AI strategies to Wall Street.

Tim Cook’s Approach to AI

Chief Executive Tim Cook emphasized Apple’s focus on delivering results before discussing them publicly. While hinting at exciting developments in generative AI scheduled for later this year, Cook stressed the company’s commitment to showcasing tangible outcomes rather than hype.

Goldman Sachs’ Perspective

Goldman Sachs recently removed Apple shares from its conviction list but maintained a buy rating on them. Analyst Mike Ng underscored the strength of the Apple ecosystem and associated revenue durability & visibility, expressing confidence despite market concerns about slower product revenue growth.

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