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The backstory: For over a year, Apple was the top dog among publicly traded companies, holding the title of the most valuable public company and beating out competitors like Microsoft. It meant Apple held the highest market capitalization, essentially the total value of its shares. But Microsoft occasionally outpaced Apple, especially in 2021, during concerns about iPhone supplies due to the COVID pandemic.
Last year, Microsoft's CEO, Satya Nadella, made some major moves for the company. He invested significantly in artificial intelligence (AI), incorporating tools like ChatGPT to stay ahead in the industry and solidifying ties with ChatGPT creator OpenAI, a major player in AI.
Meanwhile, Apple faced challenges, coping with a dip in demand in China after the pandemic and increased competition from local competitors like Huawei. iPhone sales plunged, partly due to reports of Chinese government restrictions. And in December, Apple hit another roadblock with a temporary ban on selling its latest Apple Watch models in the US because of a patent dispute.
More recently: Analysts in 2024 downgraded Apple, flagging slow iPhone sales and an expected quiet March quarter. Notably, the company announced last week that former Vice President Al Gore will retire from Apple's board this coming February, a position he’s held since 2003. On the flip side, Analysts from Piper Sandler highlighted a three-month spike in GitHub traffic, highlighting Microsoft's strong focus on AI products.
The development: Microsoft is now the world's most valuable public company, beating Apple. As of the latest market close on Friday, Microsoft's shares were priced at US$388.47, securing a market cap of US$2.89 trillion. In comparison, Apple closed at US$185.92 per share, holding a market value of US$2.87 trillion. This is big news considering Microsoft's trailing position behind Apple over the past decade.
"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," said D.A. Davidson analyst Gil Luria.
"China could be a drag on performance over the coming years," brokerage Redburn Atlantic said in a client note on Wednesday, downgrading Apple's shares to "neutral."
“Microsoft is building the infrastructure to support AI innovation, and we are reimagining every aspect of our data centers to meet the needs of our customers,” said Scott Guthrie, Microsoft cloud and AI group EVP last year. “At the scale we operate, it’s important for us to optimize and integrate every layer of the infrastructure stack to maximize performance, diversify our supply chain and give customers infrastructure choice.”