In 2010, with the hot sales of the fourth generation iPhone, Apple's market value surpassed Microsoft for the first time. Since then, Apple's market value has skyrocketed, becoming the world's most valuable company, and becoming the first technology stock in history to go public with a value exceeding $1 trillion and $2 trillion in 2018 and 2020, respectively. At the beginning of 2024, Microsoft, which was once marginalized by the market, has now risen again with its cloud and AI capabilities. The status of the two has once again exchanged, which is seen by the market as a transition between the development ideas of new and old technologies.
Transposition
At a time when Apple suffered two downgrades, Microsoft, which is riding on AI, has quietly caught up. On January 12th local time, Microsoft Inc. in the United States closed the day with a market value of $2.89 trillion, surpassing Apple Inc. with a market value of $2.87 trillion, becoming the world's highest valued company again.
On the same day, Microsoft closed at $388.47 per share, up 1%, and its stock price rose by over 3% during the week; Apple closed at $185.92 per share on the whole day, up 0.18%, and its stock price fell more than 3% during the week.
As tech giants, although the competitive fields of Apple and Microsoft do not completely overlap, the struggle for the top spot in the US stock market has never stopped. Apple's market value was first boosted by the Silicon Valley technology boom and star products such as the iPhone in 2011, surpassing ExxonMobil, the largest oil company in the United States, to become the world's highest listed company by market value.
Since then, Apple has almost always been in a leading position in terms of market value, but there have also been times when it was briefly surpassed by Microsoft. In 2018, Microsoft's cloud computing business began to flourish, achieving this breakthrough for the first time. In 2021, Microsoft's market value briefly surpassed Apple again.
According to market data compiled by Dow Jones, since February 2019, the title of "King of American Stocks" has belonged to either Apple or Microsoft. Amazon, which had briefly reached the peak of the US stock market before, has experienced a significant decline in valuation. Currently, its market value has been approached by the rising star Nvidia, while Microsoft has transformed from an early company that relied on computer hardware sales to a giant that relies on software businesses such as generative AI and cloud computing.
Assistance
It is widely believed that Microsoft's return to the top spot in market value is due to its success in the field of artificial intelligence. According to Brad Reback, an analyst at Stifel Financial, from an investor's perspective, generative AI can impact all of Microsoft's businesses, and Apple "hasn't been able to tell any AI stories yet.".
In 2022, the emerging AI giant OpenAI launched ChatGPT, sparking a global AI craze. Microsoft, which had once spent a lot of money becoming OpenAI's largest shareholder and partner, began to reap the benefits. After every release of product news related to artificial intelligence last year, Microsoft's stock price skyrocketed in response. In 2023, the company's cumulative increase was nearly 60%. According to information previously disclosed by foreign media, Microsoft's total investment in OpenAI may reach 13 billion US dollars starting from 2019.
Regarding the relationship between the two, Microsoft President Brad Smith previously responded to the public that Microsoft's collaboration with OpenAI has promoted more artificial intelligence innovation and competition, and its new observer status in the OpenAI Council is the only association between the two companies. Microsoft does not own any shares in OpenAI, but only has the right to share profits.
In January of this year, Microsoft Vice President Dee Templeton joined the new board of OpenAI as a non voting observer. Templeton is able to represent Microsoft in OpenAI board meetings and obtain key information, but does not have voting rights on major issues such as OpenAI elections. However, the industry still believes that Microsoft's potential impact on OpenAI cannot be ignored.
However, as governments around the world strengthen their regulation of artificial intelligence, Microsoft will also face challenges in the future. In addition, the European Union, the United Kingdom, and the United States are planning to launch an antitrust investigation into Microsoft's investment in OpenAI to determine whether the business logic behind this investment involves monopolies, and may require Microsoft to cut ties with OpenAI.
Downregulation
In sharp contrast to the booming Microsoft, Apple is facing a series of problems such as a decline in market share. Dan Morgan, Senior Portfolio Manager at investment trust company Synovus Trust, said that the key lies in which company has a better "bait" to raise its market value to $3.5 trillion: "It can be said that Microsoft is in a more favorable position. Apple is still working hard to find the next breakthrough point."
Zhang Xiaorong, the director of the Deep Technology Research Institute, analyzed to a reporter from Beijing Business Daily that Apple still heavily relies on the hardware sales of iPhone products, and in important markets such as China, the market share of iPhone continues to decline, causing market participants to worry that Apple no longer has a nearly monopolistic advantage like in its heyday.
A data released by research firm Counterpoint Research shows that in 2023, Apple's market share in the high-end smartphone market (wholesale prices above $600) decreased from 75% to 71%, while Samsung's market share increased from 16% to 17%, and Huawei's market share increased from 3% to 5%.
In the first week of 2024, Barclays Bank and investment bank Piper Sandler successively downgraded the rating of Apple's stock, believing that the growth rate of Apple's smartphone sales had peaked, and concerned that its smartphone inventory in the first half of 2024 would be too high. Investment firm Redburn Atlantic has also downgraded Apple's stock rating from "buy" to "neutral".
Barclays Bank analyst Tim Long believes that the poor sales of iPhone 15 will continue; Although the iPhone 16 has not been released yet, it is expected that there will be no major upgrades that will stimulate consumers to upgrade. Barclays Bank also pointed out that the decline in consumer electronics may continue for a long time, which is a huge challenge for Apple.
Apple is also trying to break free from the current questionable situation and take a new step in hardware products. Next, Apple's heavyweight product Vision Pro headset will be available for sale in the United States on February 2nd, priced at $3499. This product is considered a revolutionary change within Apple that is comparable to the iPhone. However, a report released by UBS on January 7th estimated that the sales of Vision Pro contributed "relatively negligible" to Apple's earnings per share in 2024.
Apple's "Prophecy Emperor" and Tianfeng International analyst Guo Minggui posted that the Vision Pro has only 60000 to 80000 units in stock. Considering the novelty of the product and the loyalty of Apple fans, he believes that the Vision Pro can easily sell out once it goes on sale. However, Guo Minggui also pointed out that Vision Pro only showcased the technology last year, but did not specify the more important product positioning and key applications. If Vision Pro cannot be sold out instantly, it will be lower than expected, affecting Apple and the stock price of the industry chain.