Move over Apple, Microsoft now the world's most valuable company

Apple's Q4 revenue falls short of expectations

The drop in Apple Inc’s shares on Friday propelled Microsoft Corp to the position of the world’s largest listed company by market capitalisation.

Apple fell as much as 3.9 per cent to $146.65 after reporting fourth-quarter revenue that came in below the average analyst estimate, which gave the iPhone maker a market value of $2.41 trillion. Microsoft rose as much as 1.1 per cent to hit a market value of $2.46 trillion, blowing past Apple after reporting estimate-topping results for an 11th straight quarter earlier this week.

“If you’re looking for safety in tech, Microsoft probably seems like a safer bet to me than Apple,” Michael Matousek, head trader at US Global Investors, said in a phone interview. “If there was a downturn in the economy, I would expect Microsoft to stand up better, because its products are diversified across more businesses”

The last time Microsoft dethroned Apple was in the first half of 2020 as investors flocked into growth stocks amid the pandemic. Microsoft is on pace for its best weekly gain since January.

In June, Microsoft took its place in the history books as just the second US public company to reach a $2 trillion market value, buoyed by bets its dominance in cloud computing and enterprise software will expand further in a post-coronavirus world. Its shares have outperformed Apple and Amazon.com this year on expectations of long-term growth for both earnings and revenue, and expansion in areas like machine learning and cloud computing. Microsoft is up more than 45 per cent, while Apple is about 11 per cent higher and Amazon is up more than 1 per cent. Its shares aren’t cheap, trading at a 20 per cent premium to the technology-heavy Nasdaq 100 Index.  But lofty valuations haven’t stopped investors from adding to their positions in tech stocks this year. 

Supply Crunch Hurts iPhone Maker’s Sales

Apple’s quarterly revenue missed analysts’ estimates, hurt by supply constraints that took a bigger-than-expected bite out of sales.

Fiscal fourth-quarter revenue amounted to $83.4 billion, the tech giant said Thursday, missing estimates of $84.7 billion. That represents growth of 29 per cent from the year-earlier period, but that quarter didn’t include a new iPhone. Apple released the iPhone 13 in the last few weeks of the latest quarter, helping bolster sales.

The results spark fresh concerns about Apple’s ability to navigate a global supply crunch that has wreaked havoc on the auto, tech and consumer-product industries. The company has a slew of new products that it needs to get into consumers’ hands before the holidays, a period that’s expected to set sales records. In addition to the iPhone upgrade, the company has rolled out new watches, iPads, Mac computers and other items. CEO Tim Cook said on a conference call that the supply constraints were worse than expected last quarter and cost it about $6 billion. Consumer demand was very strong, he said. Cook said the company expects year-over-growth for its quarter ending in December. Analysts expect growth of 7.4 per cent to $119.7 billion.

“We're projecting very solid demand growth year over year. The company's accessories segment, which contains fast-growing categories like its AirPods wireless headphones, came in at $8.8 billion, half a billion dollars lower than analyst expectations of $9.3 billion, according to Refinitiv data.

Other segments fared better.  Sales for iPads and Macs were $8.3 billion and $9.2 billion, compared with analyst estimates of $7.2 billion and $9.2 billion, according to Refinitiv data. The company's services segment had sales of $18.3 billion in revenue, up 26 per cent.

With inputs from Reuters