Microsoft Corp. is on the verge of surpassing Apple Inc. to become the most valuable company in the United States once again. Currently valued at $2.73 trillion, Microsoft is just $100 billion behind Apple, which holds a valuation of $2.83 trillion. This marks a significant shift as Apple has held the title for several years, only briefly relinquishing it in November 2021.

In terms of stock performance, Microsoft has outperformed Apple, with a 57% increase in 2023 compared to Apple’s 48%. Furthermore, Microsoft has experienced smaller losses at the start of 2024.

A key factor contributing to Microsoft’s rally is its strong performance in enterprise spending, benefiting its Azure cloud computing business. The company’s focus on artificial intelligence (AI) has also aided its success, with analysts noting that Microsoft seems to be outperforming its rival Alphabet Inc. in the cloud.

Microsoft’s business is deeply intertwined with AI, and a crucial test in the coming year will be whether customers are willing to invest in AI enhancements for the company’s productivity and software offerings.

On the other hand, Apple has faced challenges in recent quarters, including increased competition in China and overall macroeconomic pressures impacting consumer spending. The company has seen four consecutive quarters of year-over-year revenue declines, resulting in stock downgrades from two analysts in 2024. These downgrades highlight the potential ongoing pressure in the saturated smartphone market.

In conclusion, Microsoft’s continued growth and focus on AI have positioned it on the brink of reclaiming the coveted title of most valuable company in the United States, posing a challenge to Apple’s longstanding position.

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