Microsoft Surpasses Apple As The World’s Most Valuable Stock
It’s been a busy 24 hours for the FAAMGs which incidentally are no longer to be called FAAMGs now that Facebook is changing its name to Meta, which means that with the letters Google, Apple, Microsoft, Meta and Amazon, the new and far more suitable acronym is GAMMA, as in gamma squeeze to all time highs as SoftBank did last August and as Archegos tried (and failed) in March. Of course, all that assume Meta is still in the top 5: after all Tesla is now bigger than Facebook, although its presence in the top 5 depends on the continued gamma squeeze which could reverse at any moment. In any case, just more acronym confusion.
But there was another notable change: with Microsoft gaining as much as 0.9% at Friday’s open, it has surpassed Apple as the most valuable US (and really global) stock as its market capitalization rose to a record $2.453 trillion. This is because Apple fell as much as 3.9% to $146.65 at the open, giving it a market value of about $2.42 trillion following first revenue miss since 2017, while warning that a supply crunch would cut sales by $6 billion.
Meanwhile, Microsoft has been climbing for four straight days and is on pace for its best weekly gain since January, as the company’s cloud-based software helped drive robust sales and profit growth, which topped analysts’ estimates for an 11th straight quarter.
“If you’re looking for safety in tech, Microsoft probably seems like a safer bet to me than Apple,” Michael Matousek, head trader at U.S. Global Investors, said in a phone interview. “If there was a downturn in the economy, I would expect Microsoft to stand up better, because its products are diversified across more businesses”
This past June Microsoft took its place in the history books as just the second U.S. public company to reach a $2 trillion market value, buoyed by bets its dominance in cloud computing and enterprise software will expand further in a post-coronavirus world. Its shares have outperformed Apple and Amazon.com this year on expectations of long-term growth for both earnings and revenue, and expansion in areas like machine learning and cloud computing. Microsoft is up more than 45%, while Apple is about 11% higher and Amazon barely higher YTD.
That said, MSFT shares aren’t cheap, trading at a 20% premium to the Nasdaq 100 Index. But lofty valuations haven’t stopped investors from adding to their positions in tech stocks this year. The Nasdaq 100 Index is on pace with the S&P 500 Index with a more than 22% rally each and the Nasdaq Composite is up about 20%.
“Size begets size and strength begets strength. This is the sort of thing that is nice to see; Microsoft was a rock star in the 90’s — one of the four horsemen — and it has clearly gotten its mojo back,” Matousek said.
According to Bloomberg, the last time Microsoft dethroned Apple for the top spot was in the first half of 2020 as investors flocked into growth stocks amid the Covid-19 pandemic.
Fri, 10/29/2021 – 10:05
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