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Forget FAANG. The new tech heavyweight is … Microsoft?
Microsoft briefly overtook Apple to become the world’s most
valuable company on Tuesday, according to data from Refinitiv.
Microsoft’s rise is fueled by continued traction with cloud
computing and its ability to avoid the disappointing earnings
results and increased regulatory scrutiny that have plagued many of
its big tech rivals recently.
After flirting with reclaiming the title from Apple during trading
Monday, Microsoft narrowly passed Apple at the market open Tuesday.
At the open, Microsoft had a market cap of $815.8 billion, compared
to Apple’s roughly $815.5 billion, according to Refinitiv.
Microsoft was helped by investor jitters overnight about a report
that President Donald Trump is open to placing tariffs on the
iPhone. The two companies quickly traded positions again in early
trading Tuesday.
Don’t panic about iPhone sales just yet
Apple first passed Microsoft to become the world’s most valuable
company in 2010, as its consumer hardware business thrived while
Microsoft’s floundered. Now, Microsoft is thriving in large part by
focusing not on consumers, but enterprise customers.
Under CEO Satya Nadella, Microsoft has made a years-long bet on
cloud computing. This has positioned Microsoft as one of the two
dominant players — along with Amazon — in a fast growing market,
and propelled the company to its first $100 billion sales year.
Apple, meanwhile, has seen its stock plunge amid concerns about
sagging demand for the new lineup of pricey iPhones and its
decision to stop disclosing unit sales for smartphones — not to
mention the latest tariff concerns.
Microsoft doesn’t have to worry about the “flat-lining” market for
smartphones plaguing Apple, says Dan Morgan, senior portfolio
manager at Synovus Trust. Neither is it particularly vulnerable to
an exodus of social media users over privacy concerns.
“Microsoft’s huge strides that it has made in the Cloud space,
which is more enterprise focused,” Morgan says. That “has allowed
[its] shares to outperform its Tech Brethren.”
Daniel Ives, an analyst with Wedbush, tells CNN Business that
Microsoft has “almost been Teflon-like.” The company is “continuing
to hum along,” even as “many of their well-known tech peers [are]
going into major stumbling blocks.”
As problems pile up, Mark Zuckerberg stands his ground in exclusive
CNN Business interview
Google and Facebook are increasingly in the crosshairs of
regulators over data privacy. The latter has seen its market value
fall as much as 40% from its peak in July as investors worry about
the long-term privacy backlash.
Yet, in an odd twist of fate for Microsoft, which was sued 20 years
ago by the United States for engaging in anticompetitive behavior,
regulation is suddenly one of its strengths in the tech
industry.
“For the first time in two decades, Microsoft is on the right side
of the regulatory discussion,” says Brad Reback, an analyst who
tracks Microsoft at Stifel. “There is no regulatory issue with
Microsoft. They are just going about their business.”
In 2018, when tech companies are caught up in trade wars and
foreign election meddling, just going about your business is enough
to stand out from the pack.
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