For more than a decade, Apple was the undisputed king of the stock market. It overtook Exxon Mobil as the world’s most valuable public company for the first time in 2011 and has held the title almost uninterrupted.Thank you for reading this post, don't forget to subscribe!
But the transfer of power has started.
On Friday, Microsoft overtook Apple, claiming the crown after its market value grew by more than $1 trillion over the past year. According to Bloomberg, Microsoft ended the day worth $2.89 trillion, more than Apple’s $2.87 trillion.
This change is part of a reshaping of the stock market that was set in motion by the advent of generative artificial intelligence. The technology, which can answer questions, draw images and write code, has been touted for its potential to disrupt businesses and create trillions of dollars of economic value.
When Apple replaced Exxon, it ushered in an era of technological dominance. The values of Apple, Amazon, Facebook, Microsoft and Google dwarf former market leaders like Walmart, JPMorgan Chase and General Motors.
The tech industry still dominates the top of the list, but the companies with the most momentum have put generative AI at the forefront of their future business plans. The combined value of Microsoft, Nvidia and Google’s parent company Alphabet grew by $2.5 trillion last year. Their performance outperformed Apple, which posted a small increase in share price in 2023.
“It all boils down to what generation AI is,” said Brad Raybach, an analyst at investment bank Stifel. Generative AI will have an impact on all of Microsoft’s businesses, including its largest, he said, while “Apple doesn’t have a big AI story yet.”
Microsoft and Apple declined to comment.
Since the personal computing era, when its Windows operating system dominated sales, Microsoft has not led technology change. There was a delay in the arrival of internet, mobile phones and social media.
When Satya Nadella became chief executive of Microsoft in 2014, the company was flailing. He refocused it on the growing cloud computing business, making it a strong challenger to Amazon, the leader in the field. Then Mr. Nadella steered the company again by making aggressive bets on generative AI
In 2019, Mr. Nadella made the first of many investments from Microsoft in OpenAI, a start-up that will build the AI-powered ChatGPIT chatbot. In the late summer of 2022, he was impressed by a preview of OpenAI’s underlying technology, known as GPT-4, and soon began pushing Microsoft to add generative AI to its products, known as He called it “frantic pace.”
They started with adding a chatbot to the Bing search engine, but then began pushing AI into the Windows operating system and productive applications like Excel and Outlook, and offered OpenAI’s systems to customers of Azure, Microsoft’s flagship cloud computing product. .
The revenue has just begun to show up in Microsoft’s financial results. Generic AI contributed about three percentage points to Azure’s growth in the three months ending in September, and a $30-per-month offering inside Microsoft’s productivity software began general release in November itself.
( has sued OpenAI and Microsoft, accusing them of copyright infringement.)
This is not the first time that Microsoft has overtaken Apple in recent years. It did so in 2018, when its cloud-computing business began to flourish, and in 2021, when the pandemic disrupted Apple’s iPhone operations. But this shift may be more indicative of a fundamental shift in the tech industry.
“The question is: Who has a better mouse trap to get to the next level of $3.5 trillion?” said Dan Morgan, portfolio manager and analyst at Synovus Trust, a bank in the Southeast. “You can make the case that Microsoft is in a better position. “Apple is fighting for the next big thing.”
The iPhone, launched in 2007, took Apple to the top of the market share. Between 2009 and 2015, the company grew from selling 20 million iPhones per year to more than 200 million.
When sales of the device slowed in recent years, Apple Chief Executive Tim Cook shifted the company’s focus from selling more iPhones to selling people more apps and services on their existing iPhones. This strategy helped increase Apple’s annual revenue to $383 billion, a nearly fourfold increase from the end of 2011, the year Apple co-founder Steve Jobs died.
Mr Cook’s strategy is showing signs of fatigue. The iPhone, which accounts for more than half of Apple’s revenue, is known more for its incremental improvements each year than for its notable innovations. There has been a decline in purchases of iPad and Mac. And sales growth for its services like Apple Music is slowing.
Last year, the company’s sales had fallen for four consecutive quarters. But Apple shares still rose nearly 50 percent last year, and investors boosted its market value to nearly $3 trillion as they remained confident that demand for the iPhone would continue.
Wall Street analysts have predicted that iPhone sales will be weak this year. The company faces challenges in China, where Huawei has released a new phone and the government is banning the use of foreign smartphones.
While Microsoft and others are building new generative AI businesses, Apple has been absent from the conversation. During a call with analysts last year, Mr. Cook said Apple’s AI-related work was “ongoing,” but he declined to elaborate.
Last year, Apple engineers were testing a large language model that could power a chatbot, The Times reported. The company has also had discussions with publishers about acquiring content to train the Generator AI system. But it has not released anything publicly yet.
Gene Munster, managing partner of Deepwater Asset Management, said, “Apple needs to pay attention to what it means if it wants to maintain its position as one of the most innovative tech companies. Have to stay.”
Apple is focusing on the release of Vision Pro, an augmented reality headset. The device, which will ship on February 2, is the first major new product line the company has released since the Apple Watch in 2014. Analysts estimate Apple will sell less than half a million units.