Microsoft Surpasses Apple with the Help of AI
As generative A.I. brings new developments into the tech market, the decade-long competition between Apple and Microsoft for the top spot as the highest-market-value company faces a new age. On Friday, January 12, Microsoft officially surpassed Apple as the most valuable publicly traded company as the former’s market cap rose to $2.89 trillion while the latter’s dropped to $2.87 trillion.
Since overtaking Exxon Mobil in 2011, Apple has dominated the stock market with impressive consistency. The company’s groundbreaking technology development in the early 2000s, including the first iPhone that debuted in 2007, sent Apple to the top of the market, where it has remained in competition with Microsoft since. Despite Apple’s breakthrough success in the tech market, its recent products lack innovation as the company has focused on minor updates to their products including improvements to features such as camera quality and screen performance, which the average user may miss. As a result of this, Apple is seemingly beginning to lose users’ interest, giving way to Microsoft taking its place as the highest-value company on the market.
Analysts have reported that a major factor in Microsoft’s overtake of Apple is the former’s focus on generative A.I.: Apple has been slow to A.I., while Microsoft has seized the opportunity of this new technology and the excitement behind it.
Companies like OpenAI, which introduced popular programs including DALL-E and ChatGPT, have fueled A.I.’s rise to popularity. Microsoft CEO Satya Nadella made several early investments in OpenAI in 2019; following this, in 2022, Nadella partnered with OpenAI to add a chatbot to several of Microsoft’s software programs, including Excel, Outlook, and Word. Microsoft’s swift recognition of A.I.’s promise and subsequent execution of integrating new technology into its widely-used software has led to an astounding upward trend in its market value — the company’s share price has increased 70 percent from a year ago. Gene Munster, a managing partner at Deepwater Asset Management, told the NYT that “Apple needs to take note that if they want to maintain their spot as one of the most innovative tech companies, they have to get behind A.I. in a big way.”
Though A.I. may prove crucial to Apple’s future endeavors, the company faces several present-day issues that have also contributed to its ceding of the number one title to Microsoft. In recent months, there has been a major decline in demand for the iPhone as China, whose population accounts for 24% of all iPhone shipments, continues to struggle economically in the aftermath of the COVID-19 pandemic. Sales have also worsened due to increases in competition between Apple and Huawei. The effects of these concerns on Apple’s value have been exacerbated by recent analyses: only two-thirds of analysts covering the company recommend buying the stock, while nearly 90% of brokerages covering Microsoft recommend buying.
