Look out, Apple! Microsoft is right on your tail and gaining fast.
Supercharged by its AI chops, Microsoft's market value is now $2.8 trillion — just 5.7% shy of Apple's at $2.98 trillion. That means Microsoft's share price only needs to hit 400.53 — it's already at 377.80 — to dethrone Apple as the most valuable S&P 500 company. And given Apple's reliance on now-ubiquitous smartphones, it's only a matter of time when it bows out to faster-growing Microsoft, analysts say.
"As markets and investors start to wrap up the year, Microsoft seems destined to be the most valuable public company in the world once again," said Nicholas Colas of DataTrek Research.
Microsoft Back At The Top Of S&P 500
If Microsoft leapfrogs Apple, it won't be the first time it ruled as the U.S.' most valuable firm.
The software giant carried the highest weight in the S&P 500 most recently at the start of 2019, DataTrek says. But prior to that, it hasn't been the king of the market-value hill since the dot-com heyday of 1999-2000 and the aftermath in 2003.
And make no mistake, if Microsoft pulls the jump off, it's due to two letters: AI. Generative AI is already revolutionizing industries. And Microsoft's position with Open AI founder Sam Altman puts it in a class of its own. The fact that Microsoft so quickly moved to hire Altman when he left Open AI signals Microsoft's big bet on the technology, Colas says.
Microsoft's profit is seen rising more than 14% in the current fiscal year, topping the anemic 6.9% profit growth expected from Apple. Apple still has no AI strategy.
"Microsoft was the largest company at the height of the 1990s dot-com bubble and now, over two decades later, (it) is poised to reclaim the crown because it seems to be winning the race to develop and commercialize Gen AI," Colas said.
It's Rough At The Top Of S&P 500
Apple, Microsoft, Cisco Systems, Walmart, Exxon Mobil and Intel have battled for the top prize for decades. But it's a brutal fight.
Only Apple and Microsoft remain in the S&P 500's top-10 most valuable stocks today. All the others have been pushed aside by companies that barely registered or existed a few decades ago. Alphabet, founded in 1998, is now the third most valuable at $1.7 trillion. Amazon.com, founded in 1994, is fourth at $1.5 trillion.
But Microsoft should watch its back, even if it strips away Apple's grasp on No. 1. Nvidia, a king of high-performance semiconductor designs used in AI, is already worth $1.2 trillion. Its shares have rallied 233% this year. And it was only founded in 1993, or 18 years after Microsoft's genesis.
It's lonely at the top of the S&P 500.
Most Valuable S&P 500 Companies
| Company | Ticker | YTD change | Market value ($ trillions) |
|---|---|---|---|
| Apple | 47.3% | $2.98 | |
| Microsoft | 57.5 | 2.8 | |
| Alphabet | 56.8 | 1.7 | |
| Amazon.com | 74.8 | 1.5 | |
| Nvidia | 233.8 | 1.2 | |
| Meta Platforms | 183.6 | 0.9 | |
| Berkshire Hathaway | 17.2 | 0.8 | |
| Tesla | 89.1 | 0.7 | |
| Eli Lilly | 62.2 | 0.5 | |
| Visa | 22.1 | 0.5 |
