Microsoft Corp. eclipsed Apple Inc. as the most valuable U.S. company for the first time in nearly 16 months after the smartphone giant reported a rare sales miss in the face of supply constraints.
Apple shares AAPL, -1.82% ended Friday’s session down 1.8%, implying a valuation of $2.458 trillion based on the company’s most recently disclosed share count of 16.406 billion. Microsoft shares MSFT, +2.24% rose 2.2% Friday, implying a valuation of $2.49 trillion based on the share count of 7.508 billion that the company disclosed in its September-quarter filing.
Microsoft last had a larger market capitalization than Apple on July 2, 2020, according to Dow Jones Market Data. Friday’s rally in Microsoft shares capped off the stock’s best month since October 2015, also per Dow Jones Market Data, with shares up 18% on the month.
Microsoft and Apple both face pressures from supply constraints, but Apple appears to be feeling the sting more deeply since hardware makes up the bulk of its revenue. The company fell short of sales expectations for its fiscal fourth quarter as it estimated a $6 billion negative impact from supply issues, and Apple executives forecast a greater impact for the current 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 49% run for its stock, compared with an 13% rise for Apple shares during 2021. The Dow Jones Industrial Average DJIA, +0.25%, of which both are components, is up 17% in that span.