What you need to know
Microsoft recently dethroned Apple from its position as the world's most valuable company.
This can be attributed to the tech giant's heavy investment in generative AI.
Apple's iPhone sales have been relatively slow since the COVID-19 pandemic, especially in China.
Microsoft's market share currently stands at $3.027 trillion, a few billion dollars ahead of Apple.
Market analysts are placing all bets on Microsoft to take the most valuable company in the world crown in the next five years if it pushes on with its AI advancements.
Microsoft has recently dethroned Apple as the world's most valuable company after hitting $3 trillion in market capitalization. This can be attributed to its multi-billion dollar investment in generative AI. Apple's bread and butter, "the iPhone," has taken a significant hit in sales, especially with its latest entry, iPhone 15.
The expected and projected sales during the launch and the actual sales made up until now don't quite match up, as the demand for the iPhone is significantly low, especially in China. Apple's slow adoption and reluctance to hop onto the AI bandwagon may also have a hand in this, but that's a story for another day.
Microsoft's broad and diversified business portfolio, coupled with its advantageous position in the generative AI landscape, could potentially help it retain the crown as the most valuable company in the world. As it happens, 13 institutional investors agree that Microsoft's stock market value is on an upward trajectory, which might place it in front of Apple in the next five years, according to a Reuters spot.
Apple and Microsoft have been hovering around $2.8 trillion in market capitalization throughout January, with Microsoft's market share surging by 7% since the year began. As of the time of writing, the tech giant's market cap currently stands at $3.027 trillion, placing it several billion dollars ahead of Apple.
And as it now seems, investment analysts and strategists are placing all bets on Microsoft. When asked which company between Apple and Microsoft will likely be most valuable in the next 5 years, 13 investment analysts told Reuters that Microsoft is likelier to come out on top. The strategists further indicated that the company's early investment in the ever-emerging AI technology and its extended partnership with OpenAI create the competitive edge it needs to succeed.
NVIDIA is eyeing the top spot, too. Last year, the company was ranked as the world's most profitable semiconductor chip brand due to the rise in demand for AI GPUs. Its revenue for Q3 2023 stood at $18.12 billion, with profits at $10.42 billion, translating to a 206% year-over-year increase due to the high demand for AI chips. The report also cited Microsoft and Meta as NVIDIA's biggest clients, with each company buying 150,000 H100 GPUs.
Satya Nadella — Microsoft's best-kept secret for success
Microsoft CEO, Satya Nadella's impeccable leadership skills are evident, and it's mirrored by the success the company has enjoyed throughout his tenure. Empathy, effective communication, and transparency are some of the pillars he uses to build upon his outstanding leadership. This further explains his quick climb to the top seat at the company from making mere Excel video demos.
Nadella's tenure has also been centered around improving Microsoft's cloud computing services, giving it the competitive edge against Amazon and Alphabet. This is because most of its products, including Microsoft Outlook are now baked with AI capabilities designed to further enhance its user experience.
Apple has been playing it safe regarding AI and only makes subtle changes to its hardware and software. The company incorporated AI capabilities into its latest phone lineup, designed to improve basic functions like making calls or snapping photos.
Microsoft is set to report its quarterly earnings early this week, closely followed by Apple's report on Thursday. It will be interesting to see a dramatic shift in share prices and valuation.