Key Takeaways:
- “Apple is worth a whopping $540 billion less than Microsoft, a gap the size of Tesla’s market value.”
- “The iPhone maker’s shares are down 11% this year, while the software giant is up 14%.”
- “Apple is facing growth concerns and regulatory fights, while Microsoft is riding high on AI buzz.”
At the end of 2023, Apple held the title of the world’s most valuable public company. However, its market capitalization has since fallen drastically, now standing at $540 billion less than Microsoft, which amounts to the entirety of Tesla’s market value. Apple’s market cap reached $2.65 trillion by Thursday’s close, compared to Microsoft’s $3.19 trillion. Interestingly, just months ago, Apple’s value surpassed $3 trillion, holding a lead of approximately $200 billion over Microsoft.
This substantial difference in market value reflects the divergent performances of their respective stocks this year. While Apple shares have declined by 11%, Microsoft’s shares have surged by 14%.
Apple’s decline in market value can be attributed to various challenges faced under CEO Tim Cook’s leadership. These include skepticism surrounding its new Vision Pro headset, the reported cancellation of its car project after years of development, and a slowdown in sales, particularly in China. Moreover, the company was fined nearly $2 billion by EU regulators for market dominance abuse, followed by an antitrust lawsuit from the Department of Justice alleging illegal smartphone monopolization.
Conversely, Microsoft has seen a significant increase in its stock value this year, driven by excitement surrounding its stake in OpenAI, the parent company of ChatGPT, and its involvement in the artificial intelligence sector. Additionally, Microsoft’s development of AI tools like Copilot, coupled with its position as one of the top cloud providers alongside Amazon and Alphabet, positions it well to benefit from the growing computing boom.
Under CEO Satya Nadella’s leadership, Microsoft has experienced robust growth, with revenues climbing 15% year-on-year to approximately $119 billion in the six months leading to December, and net income soaring 30% to over $44 billion, according to its latest earnings report. In comparison, Apple’s revenues dipped by 3% to $383 billion, and net income slid by 3% to $97 billion in its annual report for 2023.
While Apple may have the potential to close the value gap and even surpass Microsoft again in the future, for now, the disparity between the two companies is vast, akin to driving a Tesla between them.