Microsoft vs Apple - Which one will be the most valuable company in 2024?

Microsoft (NASDAQ:MSFT) surpassed Apple (NASDAQ:AAPL) on Thursday, January 11th, to become the most valuable company in the world for the first time since 2021. This shift in leadership is attributed to Microsoft's rapid growth outpacing that of Apple, as the company profits significantly from generative AI hype. Will this situation continue in 2024?

Microsoft shares were up 57% in 2023 (after a fall of 29% in 2022) and could profit from the increased integration of AI in its solutions

In December 2022, OpenAI introduced a complimentary preview of its newest Artificial Intelligence (AI) conversational agent, ChatGPT, which was a triumph. The success of this release prompted increased investments by tech companies linked to the AI sector, such as Microsoft. 2023 witnessed a continued surge in enthusiasm for AI, with investors fervently seeking the next lucrative opportunity. Microsoft strategically capitalized on this burgeoning trend, reaping the benefits of its investments in OpenAI.

Microsoft initially invested $1 billion in cash in the AI firm in 2019. However, the subsequent years witnessed Microsoft substantially increasing its financial commitment to OpenAI, with additional billions poured into the partnership. The cumulative investment is rumored to have reached a staggering $13 billion. This substantial financial infusion has not only strengthened the collaboration between the two entities, but has also paved the way for Microsoft to seamlessly integrate OpenAI's innovative solutions into its own array of services.

The strategic alignment allows Microsoft to leverage OpenAI's advancements across various domains, from natural language processing to machine learning, reinforcing the tech giant's position as a leader in the rapidly evolving landscape of AI.

Through the integration of OpenAI's advanced models, Microsoft goes beyond conventional responses, delivering more intelligent interactions finely tuned to context. This integration significantly improves the user experience, ensuring smoother and more personalized interactions across an array of services and products. Moreover, the financial investment has empowered Microsoft to extend its influence into the realm of machine learning.

The incorporation of OpenAI's cutting-edge machine learning algorithms into Microsoft's suite of services unlocks new possibilities for predictive analytics, personalized recommendations, and streamlined decision-making processes. Businesses leveraging Microsoft's platforms can harness the transformative potential of machine learning to extract valuable insights, optimize operations, and foster innovation across various sectors.

For instance, the company announced on Thursday 11th of January new features using AI to help retailers improve customers profit from more personalized experiences and marketing through copilot template, Azure OpenAI Service, Microsoft Fabric, and the use of generative AI with the Microsoft Retail Media platform, for instance.

In addition to the retail sector, there are many other industries that Microsoft intends to focus on to provide more relevant solutions based on AI, such as telecommunication, the banking and financial sectors, mining, agricultural, health, education and energy industries, among others.

As a result, Microsoft stands poised to deliver enhanced and pioneering AI-driven experiences to its users while solidifying its foothold in the forefront of technological innovation, potentially pushing its stock price higher.


Daily Microsoft Chart - Source: TradingView

Apple increased more than 40% in 2023 (after a decline of around 27% in 2022), but underperformed compared to top other tech giants and could face a rocky 2024 with weaker demand

Despite exhibiting strong performance throughout 2023, the company is currently grappling with declining sales and undergoing its longest revenue decline in 22 years.
The challenges began with a slowdown in the computer and phone sector, influenced by escalating interest rates and high inflation. Consumers responded by trimming their discretionary expenses, impacting the overall demand for products in this market. Furthermore, the industry faced additional hurdles in the form of supply chain disruptions and the upward trajectory of commodity prices.

The company also deviated from its established 12-year practice of annual iPad updates, taking an unexpected turn by not introducing a new iPad model last year. Traditionally, the introduction of newer models prompts Apple to officially reduce the prices of previous models, making them more accessible to a wider consumer base. However, in the absence of new releases, these official price cuts are withheld, potentially dampening the incentive for prospective buyers to invest in older iPad models.

Following a patent dispute on the blood oxygen feature, Apple withdrew both the Apple Watch Series 9 and Apple Watch Ultra 2 from store shelves during the peak of the holiday shopping season, which might have an impact on the business. According to CNN Business, “Apple sold 49 million smartwatches in 2022 and about 26.7 million in the first 9 months of 2023.”

The launch of Apple's mixed reality headset adds an intriguing dimension to this scenario. Observers are keen to see how consumers will respond to this new product offering and, equally important, how investors will evaluate its long-term impact. The launch is anticipated to play a pivotal role in shaping Apple's position at the forefront of the future of computing. Investors will closely scrutinize not only the immediate market response but also the headset's potential to solidify Apple's leadership in the evolving landscape of technological innovation and the future of computing.


Daily Apple Chart - Source: TradingView