Key points:

  • Institutional investors believe Microsoft will overtake Apple in market value over the next five years.
  • Microsoft continues to invest in artificial intelligence, incorporating it into its products and services, including cloud computing, Outlook, and others.
  • Demand for iPhones in China has fallen sharply, which has a negative impact on Apple shares.

Leading AI position puts Microsoft on track to surpass Apple’s market value in the next five years, according to institutional investors.

Microsoft’s share price has surged by 7% in 2024, propelling its market value past $3 trillion and unseating Apple as the world’s most valuable company. As of Friday, the software giant’s market capitalization was significantly higher than Apple’s.

When posed with the question of which company will be more valuable in five years, investment strategists and managers unanimously predict Microsoft to overtake Apple.

Stock prices and valuations could fluctuate this week as Microsoft releases quarterly earnings on Tuesday and Apple on Thursday. However, long-term investors in the United States remain steadfast in their belief that Microsoft’s recent advancements in generative artificial intelligence grant it a substantial edge over Apple.

Increased competition in the technology environment

Microsoft’s early bet on OpenAI, the developer of ChatGPT, has positioned the software giant as a frontrunner in the AI race. Microsoft is continuously incorporating AI into its operations, with the aim of enhancing its cloud computing services and competing with Amazon and Alphabet in this burgeoning market. Moreover, Microsoft’s Outlook application has now incorporated AI-powered email writing assistance.

However, some analysts suggest that the rivalry between Apple and Microsoft may evolve into a contest for second place, citing the remarkable recent achievements of Nvidia, whose graphics processing units (GPUs) have spurred the AI revolution. As a result, Nvidia could emerge as a contender for the title of the world’s most valuable company in the coming years.

Apple and AI technologies

Apple has been subtly integrating artificial intelligence into its product features, such as enhancing the image quality of iPhone photos. However, investors and traders eagerly await more details about Apple’s AI plans when the company releases its results for the fourth quarter.

Additionally, attention will be directed towards the Chinese market, where iPhone demand has dramatically declined due to the sluggish economic recovery from the COVID-19 pandemic and Huawei’s resurgence is pushing Apple out of the Chinese sector.

Apple’s Vision Pro mixed reality headset, its most expensive launch in over a decade, will begin selling in the United States on Friday.

As investors express concerns about weak iPhone demand in China, Apple’s shares have remained flat for 2024, trailing the S&P 500’s nearly 2.5% rise and Microsoft’s 7% increase this year.