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Apple Fears its Stock Dip Providing Leeway to Microsoft

CIO Insider Team | Thursday, 11 January, 2024
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Recently Apple witnessed a dip in its stock over concerns about iPhone sales that has left it in fear of being overtaken by Microsoft as the world’s most valuable company.

While Apple went down by 0.4 percent this week, Microsoft rose 1.6 percent which further made the iPhone maker take a back seat. Now, Apple’s stock market value stands at $2.866 trillion and Microsoft at $2.837 trillion value.

New smartphone demands have made Apple’s shares drop by four percent so far this year compared to rallying 48 percent last year. On the other hand, Microsoft has recorded a two percent increase in its shares this year from surging with 57 percent last year.

Until December 14, Apple’s stock market capitalization grew up to $3.081 trillion and Microsoft registered as much as $2.844 trillion till November 28.

In China, Apple’s iPhone sales dropped by 30 percent in the first week of this year with reports stating that pressures from Huawei and other homegrown rivals are giving tough competition to foreign tech giants.

Apple’s Vision Pro mixed-reality headset is said to mark its biggest product launch since its iPhone debut in 2007, but a UBS report claimed that the headset’s sales would be relatively immaterial due to its earnings per share this year.

When Microsoft reports in the upcoming weeks, analysts anticipate it will post revenue up 16 percent to $61.1 billion, driven by the company's continuing rise in the cloud business.

Since 2018, Microsoft’s pace has steadily rosen until it came to be on par with Apple, especially when the supply chain shortages affected by the COVID-19 pandemic hit the latter’s stock price in 2021.

Going by the common method of valuing publicly listed companies, both tech giants share relatively expensive stock price to their expected earnings till date.

Apple is said to be trading at a speeding PE of 28 which is above the 19 that it has been making for the past 10 years as per LSEG data.

Microsoft is trading above its 10-year average of 24 times forward earnings, at about 31 times.

Due to the poor demand for iPads and wearables, Apple's holiday quarter sales estimate for the quarter ended in November fell short of Wall Street's forecasts in the company's most recent quarterly report.

LSEG reports that analysts expect Apple to report revenue for the December quarter of $117.9 billion, up 0.7 percent on average. Its first sales growth year over year in four quarters would occur at that point. Apple releases its earnings on February 1.

When Microsoft reports in the upcoming weeks, analysts anticipate it will post revenue up 16 percent to $61.1 billion, driven by the company's continuing rise in the cloud business.

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