US stocks closed on January 12, local time. Microsoft's stock price rose 1% to 388.47 US dollars, reaching 2.89 trillion US dollars, surpassing Apple as the largest company in the world by market capitalization. Apple closed up 0.18% to 185.92 US dollars, closing at 2.87 trillion US dollars.

This is also the first time since November 2021 that Microsoft closed with a higher market capitalization than Apple.

Microsoft surpasses Apple, AI is the key

Over the past few years, Apple has been the hegemon at the top of the global market capitalization. In the middle of last year, its market capitalization surpassed 3 trillion US dollars, becoming the first company to achieve this spectacular milestone.

In contrast, Microsoft's leading edge in artificial intelligence (AI) has attracted investors. Although Microsoft's market capitalization did not reach 3 trillion US dollars at one point, in 2023, driven by the trend of artificial intelligence, its stock price rose nearly 60%.

Over the past year, the combined market capitalization of Microsoft, AI chip giant Nvidia, and tech giant Alphabet, the parent company of tech giant Google, increased by a total of 2.5 trillion US dollars. Due to insufficient performance in AI, Apple's stock price increased relatively little last year, but it also rose by nearly 50 percentage points.

Microsoft's success in surpassing Apple this time not only reflects its strong performance in cloud computing, artificial intelligence, etc., but also reflects CEO Satya Nadella's wise decisions and continued investment in cutting-edge technologies such as artificial intelligence. Since Nadella took office in February 2014, Microsoft's market capitalization has increased nearly 20 times.

In Microsoft's latest financial report for the first quarter, the company's key cloud business contributed more than 40% of revenue, reaching US$24.3 billion, making it the biggest driving force for the company's business growth.

A number of investment banks downgraded Apple stock ratings

Entering 2024, Apple is facing many challenges.

Apple is still highly dependent on hardware sales of iPhone products, and in important markets such as China, the iPhone's market share continues to decline, causing market participants to worry that Apple no longer has an almost monopolistic advantage like during its heyday.

Due to heightened demand concerns, several Wall Street investment banks downgraded Apple stock ratings, and the company itself is facing antitrust scrutiny by the US Department of Justice.

Currently, Wall Street is more optimistic about Microsoft. The company has no “sell” rating, and nearly 90% of investment banks are concerned about the company's suggestions to buy the stock. Apple, on the other hand, has two “sell” ratings, and only two-thirds of analysts rate the company as “buy.”

According to LSEG, analysts on average expect Apple's revenue to grow 0.7% in the December quarter to reach $117.9 billion. This will mark its first year-over-year revenue increase in four quarters. Apple will announce its results on February 1.

Analysts expect Microsoft's revenue to grow 16% to reach $61.1 billion due to continued growth in its cloud business, according to reports released in the next few weeks.

“Microsoft's overtaking Apple is inevitable because Microsoft is growing faster and can benefit more from the generative AI revolution.” Jill Luria, an analyst at the brokerage firm D.A. Davidson, stated in the report.

Microsoft and Apple are still leaders in the tech world

Despite differences in the stock price trends of Microsoft and Apple, the two companies are still leaders in the technology world and the most weighted companies in the S&P 500 index, accounting for a total of about 14%.

Few other companies can match the two in terms of size. The market capitalization of oil giant Saudi Aramco (Saudi Aramco) is slightly above $2 trillion, while Alphabet Inc., Amazon, and Nvidia all have a market capitalization of over $1 trillion. Meta Platforms Inc. rose nearly 200% in 2023, followed by slightly below the trillion dollar mark.

In the future, both Microsoft and Apple will face new opportunities and challenges, and AI will be a key factor.

Microsoft has demonstrated its strong strength and strategy in AI. It has not only applied AI in cloud services, office software, and games, but also launched its own AI chips and platforms, such as Azure AI, Microsoft AI, and Azure Perception.

Although Apple is not as high-profile as Microsoft in terms of AI, it is also actively deploying and investing.

Apple's CEO Cook once said, “AI will be everything in the future, and we want to do better in this field.”