According to analysts Microsoft's early advantage in AI has the software heavyweight's stock market value prepared to pull significantly above Apple's over the next 5yrs.

Microsoft's early advantage in AI has the software heavyweight's stock market value prepared to pull significantly above Apple's over the next 5 years, 13 institutional investors unanimously agreed ahead of the two titans' quarterly releases this week.

Recently, Microsoft's stock market value has surpassed $3 trillion, overtaking Apple as the most valuable corporation in the world. The company's shares have increased by 7% thus far in 2024. The Redmond, Washington-based software company's market valuation was just a few billion dollars more than Apple's as of Friday. All 13 financial analysts and portfolio managers surveyed by Reuters last week, when asked which they thought would be more valuable in five years, predicted Microsoft to surpass Apple.

This week, when Apple announces its quarterly results on Thursday and Microsoft reports its quarterly results on Tuesday, share prices and values might fluctuate. Long term, however, according to every investor Reuters spoke with, Microsoft has a significant advantage over Apple due to its recent achievements in generative AI.

Nvidia's recent big advances, whose processors have fuelled the AI revolution, have some saying that the competition between Apple and Microsoft might instead become a race for second place. Microsoft is implementing generative AI technology throughout its company and made early investments in OpenAI, the company that makes ChatGPT. In the growing cloud computing sector where Microsoft competes with Amazon and Alphabet, AI is expected to help Microsoft's services. Through its apps division, Outlook now provides users with AI-assisted email composition.

Although Apple has been subtly integrating AI into its products—such as improving iPhone photography—investors will want to learn more about the company's AI aspirations when it releases its results for the December quarter. They'll also be keeping an eye on China, where the COVID-19 pandemic's delayed economic recovery has resulted in a decline in demand for iPhones, and where a resurgent Huawei is eating into the market share of the Cupertino, California-based corporation.

Apple's stock has been stagnant thus far in 2024, failing both the 7% increase in Microsoft shares and the approximately 2.5% increase in the S&P 500 due to investor concerns about the lacklustre demand for iPhones in China.

According to LSEG data, 50 Wall Street analysts advise purchasing Microsoft shares, 4 have neutral recommendations, and none advise selling. 12 analysts rate Apple as neutral, while 26 rate it a buy. 2 analysts advise selling, with Barclays downgrading Apple to "underweight" this month for concerns over "lacklustre" iPhone sales.

(Sources: investing.com, reuters.com)