Microsoft Eclipses Apple as Most Valuable Company

Following the smartphone giant’s unexpected sales deficit due to supply bottlenecks, Microsoft Corp. is likely to overtake Apple Inc. as the most valuable firm in the United States for the first time in over 16 months.

Apple shares AAPL, -2.35% are off 3.6% in Friday morning trading, which would imply a valuation of $2.413 trillion if the movement carries through to the close, based on the company’s most recent share count of 16.406 billion disclosed in its latest 10-K.

Microsoft shares MSFT, 1.82% are up 0.7% Friday, which would imply a valuation of $2.453 trillion based on the share count of 7.508 billion that the company disclosed in its September-quarter filing.

Microsoft was last larger than Apple on July 2, 2020, according to Dow Jones Market Data.

Microsoft and Apple are also under pressure from supply restrictions, but Apple appears to be feeling the sting more acutely since hardware accounts for the majority of its sales. The business fell short of sales projections in its fiscal fourth quarter due to a $6 billion negative impact from supply challenges, and Apple officials predict a larger impact in the coming quarter.

While COVID-related manufacturing disruptions have eased, the company still faces chip shortages affecting “pretty much most of our products currently,” Chief Executive Tim Cook said on Apple’s earnings call. The company still expects to report record revenue during the December quarter.

Microsoft acknowledged supply constraints as well when it posted fiscal first-quarter earnings Tuesday afternoon but it also issued a personal-computing forecast that easily exceeded the consensus view.

“I believe Q2 will also be a strong demand quarter that is constrained by supply,” Chief Financial Officer Amy Hood said on the earnings call, though she still sees a “growing market.”

Microsoft gained ground on Apple this year thanks to a 47% run for its stock, compared with an 11% rise for Apple shares during 2021. The Dow Jones Industrial Average DJIA, 0.04%, of which both are components, is up 17% in that span.