Microsoft and Apple, 20 years exchanging leadership in market capitalization

Microsoft and Apple, 20 years exchanging leadership in market capitalization

Apple and Microsoft have for decades traded leadership as the world’s most valuable company in terms of market capitalization. In the 1990s, Microsoft dominated by capitalizing on the success of Windows, displacing General Electric as the most valuable company in the United States. Apple fell on hard times, on the verge of bankruptcy amid intense competition in the personal computer market, dealing with failed attempts to modernize its operating system and with product launches.

However, the return of Steve Jobs as CEO of the company marked a radical turn for Apple in the following decade. The successful launch of iconic products such as the iMac, iPod and iPhone, along with the “Think Different” advertising campaign and the opening of the Apple Store, catapulted the company’s shares. In 2004, Apple reached $297 billion in market capitalization, surpassing Microsoft with $291 billion.

Since then, Apple has led the market, with the exception of 2018, shortages in the supply chain affected the value of the shares, a situation that deepened with the pandemic. Recently, Microsoft has returned to the top of the market at the beginning of 2024, in the face of weak performance in Apple shares. Microsoft’s prominent position in generative artificial intelligence has boosted its value thanks to its investment in OpenAI, the company behind ChatGPT.

They have marked a new market cycle

“Microsoft and Apple have benefited from a decade of strength for US companies in terms of relative growth.”in comparison with other geographies, as well as the strength of the dollar worldwide, which has caused its companies to concentrate a large part of investor flows,” says Camilo Thomas, director of variable income at Alianza Valores.

The expert highlights the current market leadership of seven large American companies, all in the technology and artificial intelligence sector. He explains that Before, there was the predominance of the strength of firms in the raw materials sector, in which names like Shell, British Petroleum or X Mobil have lost prominence.

“It is difficult for companies that are dominant one decade to maintain that dominance for the next, not because they are not good, but because the returns could be concentrated in other sectors according to how the market changes its investment thesis,” explains the analyst.