Source: PaxForex Premium Analytics Portal, Fundamental Insight
As of the end of 2023, Apple retains its position as the world's largest company, boasting a market cap of $2.94 trillion, with Microsoft closely trailing at $2.81 trillion, merely a 4.6% gain away from taking the lead.
The prospect of Microsoft surpassing Apple in 2024 is contingent on various factors. Apple predominantly caters to consumers, relying on products like iPhones, iPads, and Apple Watches. This consumer-centric focus makes Apple's performance closely tied to consumer confidence, evident in recent revenue declines over four consecutive quarters.
In contrast, Microsoft maintains a more balanced portfolio, offering products for both consumers and businesses. With the growing prominence of its Azure cloud computing service, Microsoft is increasingly positioning itself as a business-to-business investment. Unlike Apple, Microsoft has demonstrated resilience, achieving mid- to high single-digit revenue growth over the past year, culminating in an impressive 13% growth in its latest quarter. The trajectory of each company's business model will play a crucial role in determining which emerges as the world's largest company in the coming year.
The debate over which company will dominate at the end of 2024 hinges on a pivotal question: the strength of consumer versus business influence. Given Microsoft's robust presence in key trends like cloud computing and artificial intelligence (AI), it's challenging to contest its momentum.
While Apple boasts a diverse product lineup, approximately half of its revenue is derived from iPhone sales. Notably, the iPhone's market share in the U.S. has plateaued at around 50% since 2020, posing a challenge for further growth unless Apple introduces innovative products or expands its services globally.
In contrast, Microsoft's diverse portfolio, coupled with a strong focus on AI, particularly through Azure, positions it favorably. Cloud computing, integral to AI development, benefits Microsoft as Azure provides the necessary data storage and computing power for accurate AI models. With cloud computing forecasted to be a $1.6 trillion market opportunity by 2030, Microsoft's approximately 22% market share in this segment positions it well to capitalize on this burgeoning trend.
Microsoft's strategic moves, including the integration of AI co-pilot in its office products, collaboration with OpenAI, and the recent acquisition of Activision Blizzard, signal a forward-looking and diversified approach. In comparison to Apple, Microsoft appears to be in a more advantageous position.
While acknowledging that Microsoft's stock carries a higher price tag than Apple's, the company's ambitious initiatives and recent successful executions justify the premium. Considering Microsoft's trajectory, it seems plausible that it could surpass Apple as the world's largest company in 2024, and there's a possibility of achieving this even before 2023 concludes. From the current standpoint, Microsoft appears to be a compelling investment, and, given the choice, it stands out as a preferred option over Apple.
As long as the price is above 350.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 337.15
- Take Profit 1: 384.00
- Take Profit 2: 400.00
Alternative scenario:
If the level of 350.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 350.00
- Take Profit 1: 340.00
- Take Profit 2: 320.00
