50 Buy Ratings for MS... Apple Has 26, Half as Many
Wall Street: "MS Market Cap Will Surpass Apple Even in 5 Years"
Leading AI Market... Brighter Mid-to-Long-Term Outlook
Focus on Earnings Reports This Week
Microsoft (MS), which surpassed Apple to become the world's largest company by market capitalization, is expected to maintain its leading position based on its artificial intelligence (AI) competitiveness, a view spreading on Wall Street. MS and Apple are both set to announce their earnings this week during the 'Earnings Super Week,' when big tech (large information technology companies) report their results, continuing the competition for the top market cap spot.
According to major foreign media and the London Stock Exchange Group (LSEG) on the 29th (local time), 50 analysts on Wall Street have issued 'buy' ratings for MS stock. In contrast, only 26 analysts recommended buying Apple stock, about half the number for MS.
Wall Street's 'neutral' ratings numbered 4 for MS and 12 for Apple. The 'underweight' ratings advising to sell were zero for MS and two for Apple. This shows that Wall Street analysts are much more optimistic about MS stock than Apple.
MS stock has soared over 7% this year while Apple’s stock has remained flat. MS, which invested early in OpenAI and benefited from the success of ChatGPT, saw its stock rise nearly 57% last year. On the 25th, MS surpassed a market capitalization of $3 trillion (about 4,010 trillion KRW), overtaking Apple to become the most valuable company in the world. Currently, MS’s price-to-earnings ratio (PER) stands at 33 times, significantly higher than Apple’s 28 times and the S&P 500 index’s 20 times. Once considered a 'has-been' 1990s PC king that lagged behind other big tech companies in the smartphone era, MS has rapidly transformed into an AI leader through bold investments and innovation in AI startups. Previously, MS invested $13 billion (about 17.37 trillion KRW) in OpenAI, securing a 49% stake.
Wall Street experts also predict that MS’s corporate value will surpass Apple’s in five years. When a foreign media outlet asked 13 institutional investors on Wall Street last week about their outlook on MS and Apple’s corporate value in five years, all respondents expected MS to outpace Apple. The reason is that MS, partnering with OpenAI, is leading the generative AI trend dominating the IT industry, giving it a much brighter mid- to long-term outlook.
On the other hand, Apple is applying AI features to its products like the iPhone but lags behind MS and Google in AI competitiveness. After Steve Jobs launched the iPhone in 2007, Apple’s stock rose 4,300%, reaching the top market cap spot in 2011, but it has since ceded AI leadership to other big tech companies. Expectations of declining iPhone demand in China also weigh on Apple’s stock.
Mike Dickson, Chief of Research at investment advisory firm Horizon Investments, said, "Both companies are growing qualitatively, but aggressive growth and productivity improvements are necessary to guarantee corporate value," adding, "MS is better prepared than Apple." King Lip, Chief Strategist at Baker Avenue Asset Management, said, "MS has many avenues such as Azure cloud, gaming, and enterprise software, with AI being the most attractive among them. Meanwhile, Apple relies heavily on the mature iPhone market and has yet to disclose detailed plans on how it will respond to the AI arms race."
The market is closely watching this week’s earnings reports from MS and Apple, as stock price trends could shift depending on the results. MS will report on the 30th, and Apple on the 1st of next month. The future stock direction will hinge on whether these companies meet market expectations.
Some also predict that Nvidia, which dominates the AI semiconductor market, could compete with MS and Apple for the top market cap spot in the future. Nvidia’s stock tripled last year, and last week it surpassed a market capitalization of $1.5 trillion (about 2,005 trillion KRW), threatening Amazon, which ranks fourth.
Wayne Coffman, Senior Market Analyst at Phoenix Financial Services, said, "Nvidia is similar to Intel in the early 1980s and MS in the early 1990s," and forecasted, "Nvidia could become a contender for the world’s most valuable company within five years."
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