In the AI war, Microsoft has become the heir to Apple's throne

Microsoft's shares have risen 7 percent so far in 2024, pushing its market value above $3 trillion and past Apple. When asked which would be more valuable in five years, all 13 investment strategists and portfolio managers consulted by Reuters last week said they expected Microsoft to outperform Apple.

Share prices and valuations could shift this week after Microsoft reports its quarterly results on Tuesday and Apple on Thursday. Still, those who say the race between Apple and Microsoft could turn into a battle for second place point to the recent massive gains of Nvidia, whose chips power the AI revolution.

Microsoft made early investments in ChatGPT maker OpenAI and is integrating generative AI technology into its business.

APPLE'S AI STRATEGY IS UNCLEAR

King Lip, chief strategist at Baker Avenue Wealth Management, noted that Microsoft has more arms compared to Apple, such as Azure cloud, gaming, enterprise software, and of course, artificial intelligence, and continued: "Apple relies most heavily on the iPhone, which is a mature market, and the company has not yet detailed how it will compete in the AI arms race."

Apple is quietly incorporating AI into product functions, such as taking better iPhone photos, but investors will want to hear more about its AI plans when the company reports its December quarter results. Investors are also keeping an eye on China, as Apple is having a difficult time there due to the slow economic recovery caused by the Covid-19 pandemic, while Chinese competitors are strengthening their market share.

According to LSEG data, 50 Wall Street analysts recommend buying Microsoft shares, 4 analysts have a 'neutral' rating, and none recommend selling. Apple has 26 positive analyst ratings and 12 neutral ratings, while two analysts have a sell recommendation.

News Source: 12punto