Apple becomes biggest company (again), but don’t write-off Microsoft yet

Apple shares have risen by a third since July, not bad for a company that has seen profits fall over the same period. Meanwhile, Microsoft sees profits surge, yet loses its mantle as the world’s biggest company.

Article updated: 12 November 2019 10:00am Author: Michael Baxter

June 2019: Microsoft’s market cap passes one trillion dollars for the first time ever. It has stayed above that level every day since, and recently saw shares hit an all time with a market cap of $1.1 trillion.

August 2018: Apple, which had already been enjoying a reign lasting several years as the world’s biggest, passes one trillion dollars. It didn’t stay in the this exclusive one trillion dollar plus club for long — and indeed, at one point in January of this year, its valuation was down to circa $650 billion.

But it’s been a dazzling few weeks for Apple — shares have surged such that it is now worth $1.15 trillion. Meanwhile, wee little Microsoft, despite enjoying a share price that hit its all time high this week, is worth a mere $1.1 trillion.

If you like your tech companies small, I mean really small, take a look at Amazon. It got kicked out of the trillion dollar club back in the summer and is now worth a trifling $886 billion.

Of course Aramco should be joining the club soon and will then, probably become the world’s biggest. Although personally, I don’t think it will be long (a few years) before Aramco is overtaken in the biggest company league by Apple, Microsoft, Amazon and another little, currently quite obscure company, called Alphabet/Google.

But what’s been going on with Apple and Microsoft?

Back in the summer, when Microsoft released its results for the previous quarter, they showed a big jump in revenue and earnings — up around ten per cent and by a half, respectively. Then, more recently, their latest results showed a 14 per cent rise in revenue and an increase in profits of around a quarter.

Apple, by contrast, saw a decline in revenue and profits in its previous quarter and a small rise in revenue but a fall in profits, in the latest quarter. Over the year, profits were down.

Odd then, if you just look at the results, that the Apple share price has performed so well.

Actually, although I compare the two here, they are quite different. Microsoft, under the impressive leadership of Satya Nadella, has reinvented itself as a cloud provider — and recently won a contract with US Department of Defense, pitching against Amazon’s AWS, which was the favourite to win. That was quite a coup. I confess, before Nadella took over, I had mentally written-off Microsoft, I thought it was going the way of the dinosaurs.

Apple, is trying to establish itself as a services company. Actually, its latest results did reveal its highest ever Q4 revenue.

For Apple, the iPhone is still vital, but sales are falling. The company is putting emphasis on sales of accessories such as the watch and AirPods, and services such as the Apple Card, which is a credit card.

Signs suggest that the latest iPhone, the XI, is looking good and then there is of course the Apple TV service — its entry into what is becoming a very crowded market place.

But we need to look to the future. In my view, augmented reality will eventually prove to be as big a deal as the Internet — yes, it really is that significant. Then there is the soon to occur rise of AI assistants — always with you, giving you information, reminding you of stuff and indeed of people you meet when you can’t remember their names, and real time language translation.

Combined, AI assistants and augmented reality will be up there with the discovery of how to make fire, as one of the most important technologies in our history.

Both Microsoft — with HoloLens — and Apple — which has big plans in the augmented reality space — are sitting pretty.

Watch-out Aramco, you won’t be the world’s biggest for long.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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