Apple Faces Threat From Microsoft as World's Most Valuable Company After iPhone Sales Dip

A recent dip in Apple's stock over concerns about iPhone sales has left the Silicon Valley tech giant in danger of being overtaken by Microsoft as the world's most valuable company. Worries about smartphone demand have pushed Apple's shares down 4% in 2024 after an impressive rally of 48% last year.

Meanwhile, according to Reuters, Microsoft is up about 2% year to date, following a robust surge of 57% in 2023.

Apple's Market Value Takes a Hit

Yahoo reported that Apple's stock experienced a decline of 0.4% on Wednesday, while Microsoft saw an increase of 1.6%, further eroding the iPhone maker's lead. With a market capitalization now at $2.866 trillion, Apple is just slightly ahead of Microsoft, which holds a value of $2.837 trillion.

It's worth noting that Apple's market capitalization peaked at $3.081 trillion on December 14, while Microsoft reached as much as $2.844 trillion on November 28.

According to analysts at Jefferies, sales of iPhones in China dropped 30% in the first week of 2024.

On another note, Apple is preparing to launch its Vision Pro mixed-reality headset on February 2 in the United States. This marks Apple's most significant product release since the iPhone in 2007. However, analysts at UBS predict that Vision Pro sales will have only a minimal impact on Apple's earnings per share in 2024.

Microsoft Challenges Apple's Position

It is not the first time that Microsoft has briefly overtaken Apple as the most valuable company. This happened a handful of times since 2018, with the most recent occurrence in 2021.

During that time, concerns about supply chain shortages related to the COVID-19 pandemic impacted Apple's stock price. As both tech stocks sit relatively expensive in terms of price to expected earnings, valuing these companies becomes challenging.

During their most recent quarterly report released in November, Apple provided a sales forecast for the holiday quarter. Unfortunately, this forecast failed to meet Wall Street expectations due to weak demand for iPads and wearables.

Analysts anticipate Apple will post a modest revenue increase of 0.7% to $117.9 billion for the December quarter. If achieved, this would mark Apple's first year-on-year revenue growth in four quarters. The company is scheduled to release its results on February 1.

In the coming weeks, Microsoft is expected to report a 16% increase in revenue to $61.1 billion. This growth is primarily attributed to the ongoing success of the company's cloud business.

Photo: Apple Newsroom