Microsoft Corp. is narrowing the gap with Apple Inc. in the stock market as investors see better growth and far less China risk in the software giant.
The Redmond, Washington-based company's shares have outperformed the iPhone maker's this month, bringing its market value closer to Apple, which is at the center of a flareup in tensions with China. While hundreds of billions of dollars still separate the two companies, Microsoft's positions in markets including cloud computing and artificial intelligence make it more attractive to some investors.
“Microsoft has more of what the market wants right now, and given where we stand on the pair's growth prospects, we wouldn't be surprised to see it overtake Apple,” said David Klink, senior equity analyst at Huntington Private Bank.
“We have more faith in Microsoft's margins, while the cloud and AI are growth areas that can stand the test of time over a decade. We don't know if the iPhone can do the same,” he said. “It's hard to make a bear case for Apple, given its services business, but the bull case clearly favors Microsoft.”
Shares of Microsoft slipped 0.6% on Tuesday, while Apple dipped 0.1%. The Nasdaq 100 Index fell 0.6%.
The last time Microsoft was larger than Apple was in November 2021. Apple's market cap is nearing $2.8 trillion, down from a peak of nearly $3.1 trillion but still above Microsoft's $2.4 trillion. While Apple shares have dropped this month, Microsoft has held steady, narrowing the gap between the two to roughly $200 billion at one point last week.
A preference for Microsoft over Apple is fairly common on Wall Street. The company's recommendation consensus — a proxy for its ratio of buy, hold, and sell ratings — stands well above Apple. Nearly 90% of MicrosoftRead more on tech.hindustantimes.com