Microsoft has surpassed Apple in market capitalization, reclaiming once more its position as the most prominent public company. The software company's stock has experienced a notable surge in recent months, particularly following its AI-related statements. Meanwhile, Apple is grappling considerable issues related to iPhone sales, resulting in a shift in the top positions for market value between these two major tech companies.
Apple's iPhone Sales Experiencing Considerable Decline
Apple has entered this new year with some pretty bad news, as China's iPhone sales have known a decline. The country is known for its important contribution to the brand's financial success, as it represents 20% of its income. According to a note from Jefferies, quoted on CBNC, Apple sold 30% fewer copies of the famous smartphone in the country during the first week of the new year.
Recently, Barclays lowered its recommendation on the Cupertino-based company to "underweight," which is akin to sell rating in other financial institutions. According to Reuters, the British bank believes that demand for Macs and iPhones is expected to be slow throughout the year.
Barclays also highlights the competitive atmosphere in China, where Apple is in the middle of strong competition with other smartphone brands like Huawei. The company is also struggling with governmental pressure in China, urging employees to refrain from using smartphones from foreign brands at their workplace.
Furthermore, Apple is also facing challenges in the United States, with reports from the New York Times suggesting that the Department of Justice is gearing up to initiates an antitrust investigation. The focus of the inquiry revolves around alleged practices by Apple that create obstacles for users seeking to switch from the company's product to purchase competing devices.
Artificial Intelligence, the driving force behind Microsoft's recent success
Artificial Intelligence (IA) serves as a significant driving force for Microsoft. In contrast, Apple appears to have lower exposure than Microsoft to the prominent stock market trend of the past year. The IA which powers conversational robots like ChatGPT and Bard has notably boosted the performance of Nvidia shares, which witnessed an impressive gain of over 240% last year and has maintained a 9.5% increase since the beginning of the current year.
According to reports from US media, Microsoft has invested billions of dollars in OpenAI, the company behind ChatGPT, and holds approximately 49% ownership. This substantial investment has enabled Microsoft to incorporate ChatGPT technologies into various key products and divisions, including the Bing search engine and the Azure cloud computing unit. And to fuel its expansion. In the most recent quarter disclosed, Azure experienced a substantial revenue growth of 29 %, with a noteworthy contribution of three percentage points originating from artificial intelligence. In contrast, Google Cloud's growth was limited to 22% during the corresponding period.