According to a chorus of institutional investors. Their unanimous prediction? Microsoft’s market value will decisively overtake Apple’s within the next five years.
This potential shift comes as Microsoft rides a wave of success, with its stock price already surging 7% in 2024 and briefly dethroning Apple as the world’s most valuable company. But what’s propelling this rise? Many point to Microsoft’s early lead in cutting-edge artificial intelligence (AI) technology, specifically generative AI, which some consider a game-changer.
While investors await results this week from both tech titans (Microsoft reports Tuesday, Apple on Thursday), analysts consulted by Reuters are unanimous in their prediction: Microsoft will outpace Apple in the long run. Some even suggest the race might end up being for second place, given the recent impressive gains by chipmaker Nvidia, another player in the AI revolution.
So, what gives Microsoft the edge? Experts highlight several factors:
Diversification: Microsoft boasts a broader range of offerings than Apple, spanning cloud computing, gaming, enterprise software, and of course, AI. This breadth gives it more levers to pull for growth.
AI Advantage: Microsoft’s investments in OpenAI and its integration of generative AI throughout its business are seen as a powerful advantage. They expect AI to significantly benefit Microsoft’s cloud offerings, making it a stronger competitor in that market.
Maturing Market: Apple’s heavy reliance on the iPhone, a maturing market, raises concerns about its future growth potential, especially compared to Microsoft’s diverse offerings.
However, Apple isn’t sitting idle. While they’ve been quieter about their AI plans, they’ve incorporated it into features like improved iPhone photography. Investors eagerly await details on their AI strategy during their earnings report and will be watching developments in China, a crucial market where iPhone sales have slumped.
Looking ahead, Microsoft’s higher valuation compared to Apple and the S&P 500 raises questions about its ability to sustain its growth. Analysts emphasize that both companies are strong performers, but Microsoft’s ability to increase productivity through its diverse offerings might give it an edge.
With investor sentiment divided and Nvidia emerging as a potential dark horse, the race for the top spot promises to be an exciting one to watch. As analyst Wayne Kaufman puts it, “This is like a tech version of the early days of tech giants like Microsoft and Intel.” Only time will tell who will claim the crown, but one thing is certain: AI is playing a starring role in this battle for tech supremacy.
