Microsoft is expected to outperform Apple and maintain its position as the world’s most valuable company through 2025, according to recent analysis. Microsoft recently surpassed Apple to become the most valuable company, with a market cap of $2.89 trillion compared to Apple’s $2.87 trillion. This isn’t the first time Microsoft has overtaken Apple, but can it sustain its lead over the next few years?
Apple has faced challenges in recent months, with its stock declining 4% due to sluggish iPhone sales and a lack of near-term catalysts. The company generated more than half of its revenue from iPhone sales in fiscal 2023, but its handset sales declined by 2% as the 5G upgrade cycle ended. The company also experienced a dip in Mac sales as fewer consumers upgraded their laptops and desktops. Apple’s revenue and earnings per share remained relatively flat for the year.
Analysts project a 4% increase in Apple’s revenue and an 8% increase in earnings for fiscal 2024 as the company recovers from its slowdown and the overall macro environment improves. The expansion of its services ecosystem, which already boasts over 1 billion paid subscriptions, could aid in this recovery. Additionally, the launch of its Vision Pro headset could help diversify its hardware business.
While Apple’s business remains stable, some investors are drawn to more exciting growth opportunities. On the other hand, Microsoft’s stock has risen by 19% in the past three months, driven by strong performance in its cloud business, the growth of its artificial intelligence (AI) ecosystem, and its acquisition of Activision Blizzard. Microsoft’s cloud infrastructure platform, Azure, has seen rapid growth, surpassing even Amazon Web Services (AWS). Its integration of OpenAI’s AI tools into Azure has contributed to the acceleration of its year-over-year revenue growth.
Furthermore, Microsoft’s acquisition of Activision Blizzard is expected to strengthen its Xbox business, expand its Game Pass and Cloud Gaming libraries, and help it stay competitive with Sony and Nintendo in the console market. The company’s revenue and adjusted earnings per share grew by 7% in fiscal 2023, despite facing challenges such as currency headwinds and slower enterprise spending. Analysts anticipate a 15% growth in both revenue and adjusted earnings per share for fiscal 2024.
Microsoft’s stronger growth and exposure to the AI market, despite a higher valuation than Apple, make it an enticing investment option. Looking ahead to fiscal 2025, analysts predict a 6% increase in Apple’s revenue and an 8% increase in earnings, while Microsoft is projected to see another 15% growth in both revenue and earnings.
In conclusion, Microsoft has a clear opportunity to outperform Apple throughout 2025 and solidify its position as the world’s most valuable company. With its robust cloud, AI, and gaming businesses, Microsoft continues to capture investor interest, while Apple needs to demonstrate its ability to expand beyond the iPhone.
