The Silicon Valley tech giant Apple (AAPL.O) risks losing its position as the most valuable corporation in the world to Microsoft (MSFT.O) due to a recent decline in shares caused by concerns about iPhone sales.
After rising 48% in value last year, Apple’s shares have dropped 4% in 2024 due to new concerns about smartphone demand. After soaring by 57% in 2023, Microsoft has gained roughly 2% this year. Apple’s advantage was further eroded on Wednesday when it fell 0.4%, and Microsoft gained 1.6%. Microsoft now has a $2.837 trillion market value, whereas Apple’s is $2.866 trillion.
On December 14, Apple’s market capitalization hit a height of $3.081 trillion; on November 28, Microsoft’s worth reached a peak of $2.844 trillion.
The first week of 2024 saw a 30% decline in iPhone sales in China, according to a client note from Jefferies analysts. This development indicates increasing competition from Huawei [RIC: HWT.UL] and other local competitors.
On February 2 in the US, Apple’s Vision Pro mixed-reality headset will be available. This is the company’s most extensive product launch since the 2007 release of the iPhone. According to a Monday forecast from UBS, sales of the Vision Pro would, however, be “relatively immaterial” to Apple’s earnings per share in 2024.
Several times since 2018, Microsoft has momentarily surpassed Apple to become the world’s most valuable corporation. The most recent instance occurred in 2021, when concerns about supply chain bottlenecks caused by the COVID-19 epidemic hurt iPhone manufacturers’ stock prices.
When comparing the prices of these tech stocks to their predicted earnings—a popular metric used to value publicly traded companies—they appear to be quite pricey. LSEG data shows that Apple is trading at a forward PE of 28, significantly higher than its average of 19 over the previous ten years. Microsoft is trading above its 10-year average of 24 times projected profits at about 31 times.
Due to the poor demand for iPads and wearables, Apple’s holiday quarter sales estimate for the quarter ended in November fell short of Wall Street’s forecasts in the company’s most recent quarterly report.
LSEG reports that analysts expect Apple to report sales for the December quarter of $117.9 billion, up 0.7% on average. Its first sales growth year over year in four quarters would occur then. Apple releases its earnings on February 1. Analysts predict that when Microsoft reports in the coming weeks, its sales will have increased 16% to $61.1 billion due to its continued cloud industry growth.
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