On Friday, Microsoft’s market value surpassed that of Apple for the first time since 2021, making it the world’s most valuable company. Apple’s shares inched up by 0.2 percent, while Microsoft saw a 1 percent increase, resulting in a record market capitalization of $2.887 trillion (approximately Rs. 2,39,26,500 crore), according to LSEG data. In contrast, Apple’s market capitalization was $2.875 trillion (roughly Rs. 2,38,27,300 crore), based on data from a filing on Thursday.

Apple’s shares have declined by 3 percent in 2024 due to concerns about smartphone demand, following a 48 percent surge in the previous year. In contrast, Microsoft has experienced a 3 percent gain year-to-date after a 57 percent surge in 2023, driven in part by its leadership in generative artificial intelligence through an investment in ChatGPT-maker OpenAI.

Microsoft’s incorporation of OpenAI’s technology into its suite of productivity software has contributed to a rebound in its cloud-computing business, challenging Google’s web search dominance. Apple, on the other hand, is contending with sluggish demand, particularly in China, where economic recovery from the COVID-19 pandemic is gradual, and resurgent competition from Huawei affects its market share.

While Apple’s Vision Pro mixed-reality headset is set to launch on February 2, analysts estimate its impact on earnings per share in 2024 to be “relatively immaterial.” Microsoft has briefly held the lead over Apple as the most valuable company a few times since 2018, including in 2021 during concerns about supply chain shortages related to the pandemic.

Both tech giants appear relatively expensive in terms of price to expected earnings. Apple trades at a forward PE of 28, above its 10-year average of 19, while Microsoft trades around 32 times forward earnings, exceeding its 10-year average of 24, according to LSEG data.

Analysts expect Apple to post a 0.7 percent increase in revenue to $117.9 billion (roughly Rs. 9,77,100 crore) for the December quarter, marking its first year-on-year revenue increase in four quarters. Microsoft is anticipated to report a 16 percent increase in revenue to $61.1 billion (roughly Rs. 5,06,400 crore), driven by continued growth in its cloud business, in the coming weeks.