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The drop in Apple Inc.’s shares on Friday propelled Microsoft Corp. to the position of the world’s largest listed company by market capitalization.

Apple fell as much as 3.9% to $146.65 after reporting fourth-quarter revenue that came in below the average analyst estimate, which gave the iPhone maker a market value of $2.41 trillion. Microsoft rose as much as 1.1% to hit a market value of $2.46 trillion, blowing past Apple after reporting estimate-topping results for an 11th straight quarter earlier this week.

“If you’re looking for safety in tech, Microsoft probably seems like a safer bet to me than Apple," Michael Matousek, head trader at U.S. Global Investors, said in a phone interview. “If there was a downturn in the economy, I would expect Microsoft to stand up better, because its products are diversified across more businesses"

The last time Microsoft dethroned Apple was in the first half of 2020 as investors flocked into growth stocks amid the Covid-19 pandemic. Microsoft is on pace for its best weekly gain since January.

"Compared to less hardware focused FAANG peers, Apple is also a lot more exposed to supply chain disruption," said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Analysts say Apple has managed the supply chain issue well, but with Cook warning of more pressure, the door is open to a hit to its performance as the holiday season kicks in.

In contrast, Microsoft on Tuesday forecast a strong end to the calendar year thanks to its booming cloud business, but it warned that supply-chain woes will continue to dog key units, such as those producing its Surface laptops and Xbox gaming consoles.

In June, Microsoft took its place in the history books as just the second U.S. public company to reach a $2 trillion market value, buoyed by bets its dominance in cloud computing and enterprise software will expand further in a post-coronavirus world. Its shares have outperformed Apple and Amazon.com Inc. this year on expectations of long-term growth for both earnings and revenue, and expansion in areas like machine learning and cloud computing. Microsoft is up more than 45%, while Apple is about 11% higher and Amazon is up more than 1%.

Its shares aren’t cheap, trading at a 20% premium to the technology-heavy Nasdaq 100 Index. But lofty valuations haven’t stopped investors from adding to their positions in tech stocks this year. The Nasdaq 100 Index is on pace with the S&P 500 Index with a more than 22% rally each and the Nasdaq Composite is up about 20%.

“Size begets size and strength begets strength. This is the sort of thing that is nice to see; Microsoft was a rock star in the 90’s -- one of the four horsemen -- and it has clearly gotten its mojo back," Matousek said.

Apple's stock market value overtook Microsoft's in 2010 as the iPhone made it the world's premier consumer technology company. The companies have taken turns as Wall Street's most valuable business in recent years, with Apple holding the title since mid-2020.

 

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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