Microsoft briefly overtook Apple as the world’s most valuable listed company, fulfilling what it almost did eight years ago and adding a feather on the cap on CEO Satya Nadella.
Redmond, Washington-headquartered Microsoft had a market cap of $753.34 billion, beating out the iPhone maker’s $746.82 billion in intra-day trade on Friday at the Nasdaq in New York.
Apple, however, regained control at the close. According to the Nasdaq website, Apple’s market cap rose back up to $817.58 billion. Right behind it is Microsoft, which also increased to $791.19 billion.
Tech companies have undergone some rough times recently. In particular, the so-called FAANG group – Facebook, Amazon, Apple, Netflix and Google (Alphabet) – had, as at November 20, combined market cap losses of over $1.02 trillion from their recent highs.
FAANG has lost $253 billion, $280 billion, $253 billion, $67 billion and $164 billion, respectively.
Tech shares have largely driven the stock market over the past decade, brushing aside concerns that their values are overblown as investors continued to look and buy into them.
However, this year was tough: the threat of regulation, loss of confidence in social media and uninspiring sales and revenue forecasts, plus impending interest rate hikes by the US Federal Reserve, have caused a rout in the market.
“People are selling these high multiple, high growth names and that category has been basically tech and Internet,” David Older, head of equities at Carmignac, said in an article in the UK’s Daily Telegraph.
“Software has been the most predictable growth story in the economy. [Now] you have this fear in the market of slowing growth trajectory. People are looking forward to 2019 and saying expectations are too high.”
Another point he raised: big tech companies, like Facebook, which have driven the stock market boom over the recent years, have never been tested by a global economic downturn, much like what happened in 2008.
The global economy has also been on a roller-coaster ride, fuelled mainly by the biting trade war between the United States and China, adversely affecting equities and manufacturers.
“Global stock market jitters have returned [last] week with investors growing increasingly skittish as the rout in US tech stocks, which began last month, deepens,” said David Cheetham, chief market analyst at XTB. “The market remains susceptible to further declines moving forward.”
As at posting time, Amazon had a market cap of $734.46 billion. Alphabet, which is trading as Google, had $716.4 billion, while Facebook had $378.56 billion. Netflix had $110.1 billion.
Apple, which had a stranglehold on the No.1 spot for several years, pipped the $1 trillion mark on August 2, a first for a public US company. Amazon, which had long been second thanks to CEO Jeff Bezos’ aggressive strategy and had threatened to beat Apple to the 13-figure milestone, hit it on September 4.
But both companies lost their trillion-dollar status thanks to a combination of less-than-upbeat forecasts for the holiday season, lower stock prices and a general downturn in technology equities.
Facebook’s losses, on the other hand, were mostly attributed to a number of scandals it was involved in this year, most notably the Cambridge Analytica mess.
Microsoft, meanwhile, held quite steady.
It overtook Amazon for No.2 on October 26 after the e-commerce giant lost $68.1 billion that day. It hit a market cap peak of $888.20 billion on September 20. And it came within a few billion dollars from surpassing Apple in 2010.
It cloud computing division has been the anchor for its resurgence. In its first-quarter report last month, revenue in its intelligent cloud was $8.6 billion, up 24 per cent.
Overall, revenue was up 19 per cent at $29.1 billion, operating income increased 29 per cent to $10 billion and net income surged 34 per cent to $8.8 billion.
“We are off to a great start in fiscal 2019,” Nadella, who had introduced a dramatic transformational strategy after he took the helm in 2014, said in a statement accompanying the results. It was “a result of our innovation and the trust customers are placing in us.”
The first-quarter results were also a “reflection [of Microsoft’s] commitment to long-term strategic investments and consistent execution to drive revenue growth and operating margin expansion”, executive vice-president and chief financial officer Amy Hood added.