Written by Noel Landewicz
(Reuters) – Microsoft's early lead in artificial intelligence means the software giant's stock is poised to decisively outperform Apple over the next five years, the software giant said ahead of the tech giant's quarterly results this week. , 13 institutional investors unanimously agreed.
Microsoft's stock price has increased 7% year to date in 2024, and its stock market value recently surpassed $3 trillion, dethroning Apple as the world's most valuable company. As of Friday, the Redmond, Wash., software maker's market capitalization was billions of dollars more than Apple. When asked last week which investment strategist and portfolio manager will be worth more in five years, 13 investment strategists and portfolio managers interviewed by Reuters said they expected Microsoft to outperform Apple. Stock prices and valuations could change this week as Microsoft releases quarterly results on Tuesday and Apple on Thursday. But in the long term, all investors consulted by Reuters said Microsoft's recent success in generative AI gives the company a strong advantage over Apple.
Still, some say the race between Apple and Microsoft could become a battle for second place, citing recent big gains for Nvidia, the chip that powered the AI revolution. Microsoft has made an initial investment in ChatGPT maker OpenAI to incorporate generative AI technology across its businesses. AI is likely to benefit Microsoft's cloud computing products as it competes with Amazon and Alphabet in the fast-growing market. Outlook is in the application business, providing users with his AI-powered email creation assistance.
King Lip, chief strategist at Baker Avenue Wealth Management, said Microsoft has “more ways to incorporate cloud, gaming and enterprise software forms of Azure. And, of course, the most attractive one is AI. ” he said. “Apple relies most on the iPhone, a mature market, but the company has yet to provide details on how it will compete in the AI arms race.”
Apple has been quietly incorporating AI into product features, such as making the iPhone take better photos, but investors will want to hear about further AI plans when the company reports its December quarter results. . They also focused on China, where demand for iPhones has slumped as the economic recovery from the coronavirus pandemic has been slow and a resurgent Huawei has eroded the Cupertino, Calif., company's market share. will do.
Apple will start selling its Vision Pro mixed reality headset in the United States on Friday, its most expensive gamble in more than a decade. Apple's stock price has soared more than 4,300% since Steve Jobs launched the iPhone in 2007, outperforming the S&P 500 in 2011 when Apple ousted Exxon Mobil as Wall Street's most valuable company. It has become the basis for investment by portfolio managers aiming to
Apple shares are flat so far in 2024 as investors worry about weak iPhone demand in China, lagging the S&P 500's nearly 2.5% rise and Microsoft's 7% rise this year. There is.
Microsoft stock also rose 57% in 2023 thanks to its lead in generative AI. According to LSEG, the company's stock currently trades at 33 times forward earnings, compared to Apple's forward P/E of 28 and the S&P 500's forward P/E of about 20.
“These are high-quality growth companies… But to warrant these valuations, they will need to continue to grow aggressively. Productivity improvements will be needed, but I think Microsoft “I think it's better than Apple in that respect,” said Mike Dixon, head of research at Horizon Investments.
According to LSEG data, 50 Wall Street analysts recommend buying Microsoft's stock, while 4 give it a neutral rating and none recommend selling. That's what it means. Apple has been rated positive by 26 analysts and neutral by 12, with two analysts rating Barclays “underweight” this month due to concerns about “lackluster” iPhone sales. The company recommends selling the company, including downgrading it to a lower rating.
Wayne Kaufman, chief market analyst at Phoenix Financial Services in New York, said Nvidia, whose stock price more than tripled last year and is now the most valuable semiconductor maker, will become the world's most valuable chipmaker in the next few years. He said it could be a worthy candidate. After hitting a record high last week, Nvidia's market capitalization has surpassed $1.5 trillion, making it the fifth most valuable company on Wall Street and just under $200 billion behind Amazon. “I tell brokers and clients that Nvidia is like Microsoft in the early '90s or Intel in the early '80s,” Kaufman said.
(Reporting by Noel Randewich; Editing by David Gregorio)
