Microsoft’s stock market value closed higher than Apple’s for the first time since 2021, making it the world’s most valuable company based on market capitalization.

While both technology companies were part of the so-called Magnificent 7’s powerful rally in 2023, their fortunes have diverged year. Microsoft has risen 3.3%, while Apple has dropped 3.4%.

Microsoft has incorporated OpenAI’s technology across its suite of productivity software, a move that helped spark a rebound in its cloud-computing business.

Apple, meanwhile, has been grappling with tepid demand, including for the iPhone, its cash cow. Demand in China, a major market, has slumped as the country’s economy makes a slow recovery from the COVID-19 pandemic and a resurgent Huawei erodes its market share.

Both tech stocks look relatively expensive in terms of price to their expected earnings, a common method of valuing publicly listed companies.

Apple is trading at a forward PE of 28, well above its average of 19 over the past 10 years. Microsoft is trading around 32 times forward earnings, above its 10-year average of 24.

Source: Noel Randewich,  Microsoft edges out Apple as world’s most valuable company, Reuters, January 12, 2024. https://www.yahoo.com/tech/microsoft-edges-apple-worlds-most-232740340.html