Microsoft is Richer than Apple – For Now
At this moment in time, Microsoft edges out Apple as the world‘s most valuable public company. As of March 2023, Microsoft‘s market capitalization stands at approximately $2.01 trillion, compared to Apple‘s $1.99 trillion market cap. However, the two tech giants have been neck-and-neck over the past several years.
Recent Revenue and Profits
Microsoft generated $198.3 billion in total revenue in fiscal year 2022, a 18% increase year-over-year. Revenue from cloud services led the way, growing to $90 billion. Microsoft‘s net income rose by 21% to $72.7 billion, with an enviable gross margin of 70%.
Meanwhile, Apple posted revenue of $394.3 billion in 2022, up 8% annually. Profits came in at $99.8 billion, a 5.8% increase. The iPhone continues to account for around 50% of Apple‘s sales. While Apple‘s revenue is nearly double Microsoft‘s, its year-over-year growth has been slower in recent years.
| Key Financials | Microsoft | Apple |
|---|---|---|
| Revenue 2022 | $198.3 billion | $394.3 billion |
| Revenue Growth YoY | 18% | 8% |
| Net Income 2022 | $72.7 billion | $99.8 billion |
| Profit Margin | 30% | 26% |
Over the past 5 fiscal years, Microsoft‘s revenue has grown at a compound annual rate of 15%, compared to 9% revenue growth for Apple in that period. This reflects the companies‘ strategic directions – Microsoft rapidly expanding its cloud services, while Apple relying more on periodic upgrades to its core hardware products.
Market Share and Global Reach
In terms of market share worldwide, devices running Apple‘s iOS mobile operating system comprise 27% of the global market, while Microsoft Windows OS accounts for 75% as of early 2023. However, iOS dominates mobile in North America and Japan, holding over 50% market share in those regions. This showcases Apple‘s tremendous brand loyalty in major developed markets.
Microsoft likely has more potential for growth across emerging markets like Southeast Asia, Africa, and Latin America. It also benefits from having a broader enterprise customer base across industries, while Apple is more consumer focused.
Battle to Be the Most Valuable
The competition between Microsoft and Apple for the title of world‘s most valuable company has gone back and forth several times in recent years:
- Apple first claimed the #1 spot in 2011, surpassing ExxonMobil
- In November 2014, Microsoft briefly overtook Apple before falling back again
- Through mid-2020, Apple steadily built its lead over Microsoft
- In June 2021, Microsoft re-emerged as #1 after strong cloud growth
- By October 2021, Apple was back on top with a record valuation of $2.5 trillion
- In late 2022, Microsoft again pulled ahead following soft iPhone 14 demand
As of today, Microsoft remains #1 by a slim margin over Apple, as the tech heavyweights continue to trade punches.
Outlook and Analysis
Based on current trajectories, Microsoft appears better positioned for stronger and steadier growth over the next decade. Its rapidly growing cloud business accounts for nearly 50% of sales, and cloud is undoubtedly the future. Microsoft is also pouring R&D investments into forward-looking technologies like artificial intelligence, augmented/virtual reality, and quantum computing.
However, Apple should not be underestimated or counted out. It has proven masterful at reinventing and disrupting markets, as it did with the iPhone in 2007. Rumors abound about Apple‘s secretive Project Titan car project, which could lead it to dominate yet another key industry. Apple retains an aura of prestige and loyalty that cannot be replicated.
Both companies have strong balance sheets, with Microsoft holding $104 billion in cash reserves and Apple $34 billion. They generate such high levels of profitability that they will likely continue making bold acquisitions and investments. Potential antitrust regulation remains a threat if their dominance is perceived as anti-competitive.
If I had to choose one stock to hold for the next 10 years, I would still pick Microsoft. The cloud transition has so much runway left that Microsoft‘s growth appears more sustainable. And its enterprise focus gives it an edge over consumer-centric Apple, in my opinion. However, investors would be wise to own both as cornerstones of a balanced tech portfolio. These two innovative giants are likely to remain industry leaders for decades to come.