Microsoft Corp. has reclaimed its position as the world's most valuable publicly traded company, surpassing Apple Inc. for the first time in over two years. The shift in market dominance comes as Apple faces growing concerns over smartphone demand, causing its stock to lag behind Microsoft's in recent weeks.

As of January 12, 2024, Microsoft's stock closed at $388.47, resulting in a market valuation of $2.89 trillion. Meanwhile, Apple's stock closed at $185.92, with a market capitalization of $2.87 trillion. This marks the first time since November 2021 that Microsoft has finished the trading day with a higher value than Apple.

According to David Katz, chief investment officer at Matrix Asset Advisors, which holds positions in both Microsoft and Apple, Microsoft's superior execution and earnings growth have contributed to its recent success. Katz stated, "Microsoft has done a better job of demonstrating earnings growth, whereas Apple is showing nothing special in terms of growth."

Microsoft's clear roadmap with artificial intelligence (AI) and its ability to articulate how AI will accelerate its growth have also played a significant role in its long-term prospects. In contrast, Apple has experienced a 3.4% decline in its stock value in 2024, with at least three analyst ratings downgrades due to concerns over its growth.

While both Microsoft and Apple were part of the "Magnificent 7" that led a powerful rally in 2023, their fortunes have diverged in the new year. Microsoft's stock has risen 3.3% in 2024, driven by ongoing optimism over AI advancements. Apple, on the other hand, has faced a less favorable view from Wall Street, which suggests that Microsoft may maintain or even build upon its newfound size advantage.

Analysts predict that Microsoft's stock has an upside potential of around 8% over the coming 12 months, slightly above Apple's return potential. If this growth materializes, Microsoft would become one of only two companies to reach a market valuation of over $3 trillion, joining Apple in this exclusive club.

Microsoft and Apple remain the biggest weights in the S&P 500, together accounting for roughly 14% of the overall index. Other companies that come close in size include oil giant Saudi Aramco, valued at just over $2 trillion, and tech giants Alphabet Inc., Amazon.com Inc., and Nvidia Corp., all valued above $1 trillion. Meta Platforms Inc., which saw a nearly 200% jump in stock value in 2023, is the next closest contender, sitting just below the trillion-dollar threshold.