Driven by AI (Artificial Intelligence), technology giant Microsoft has surpassed Apple to become the world's highest market value company again.
On January 12th, local time, the stock price of Microsoft (Nasdaq: MSFT), which had a market value growth of over $1 trillion in 2023, closed at $388.47 per share, up 1.0%. This week, the stock price rose by more than 3%, with a total market value of $2.89 trillion, surpassing Apple's market value of $2.87 trillion, and once again becoming the company with the highest market value in the world; Apple (Nasdaq: Apple) closed at $185.92 per share, up 0.18%, and its stock price fell more than 3% this week.
For over a decade, Apple has been regarded as the undisputed king of the US stock market. Its market value was first boosted by star products such as the Silicon Valley technology boom and iPad in 2011, surpassing Exxon Mobil, the largest oil company in the United States, to become the world's highest listed company by market value.
Since then, although there have been two records of being surpassed by Microsoft, Apple has almost always been in a leading position in terms of market value. Microsoft achieved this breakthrough for the first time in 2018, when its cloud computing business began to flourish. In 2021, Microsoft's market value briefly surpassed Apple again.
However, Microsoft's recent achievements reflect that the technology industry may have undergone a fundamental transformation, which is the enormous opportunity brought by AI. Technology giants are still at the forefront of global company market capitalization rankings, but only those companies that place generative AI in their future business plans can gain the maximum momentum.
In 2022, with the launch of ChatGPT by the emerging AI giant OpenAI, a global AI craze has been sparked. Microsoft, which values the integration of generative AI technology with its products and has invested heavily in becoming OpenAI's largest shareholder and partner, has begun to make efforts. According to information previously disclosed by foreign media, Microsoft's total investment in OpenAI may reach 13 billion US dollars starting from 2019.
In the past year, the combined market value of Microsoft, AI chip giant Nvidia, and technology giant Google's parent company Alphabet, which have actively invested in AI, has increased by a total of $2.5 trillion. However, due to their less outstanding performance in AI, Apple's stock price has seen a relatively small increase last year, but has also risen by nearly 50 percentage points.
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."
However, the returns from investing heavily in AI have only just begun to show up in Microsoft's financial results. According to Microsoft's Q1 2024 financial performance released in October last year, generative AI contributed approximately 3% to the growth of Microsoft's cloud service Azure in the three months ending September 30.
Recently, Microsoft and OpenAI are facing infringement allegations from The New York Times, but they have not had a significant negative impact on their stock prices.
In the first week of 2024, Barclays and investment bank Piper Sandler both 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. This week, investment firm Redburn Atlantic also downgraded Apple's stock rating from "buy" to "neutral".
A data released by research firm Counterpoint Research this year also 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%.
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."