Therefore, Microsoft became bigger than Apple

Apple has long been America's most valuable company, but now Microsoft is poised to seize the throne. For a few minutes on Friday, Microsoft overtook Apple as the world's most valuable publicly traded company.

A MarketWatch review of the companies suggests that Apple is no longer a growth stock and that Microsoft is the tech giant's best long-term investment.

Cruel smile: Apple CEO Tim Cook had a slow start to the new year, losing his position as the world's most valuable listed company for a few minutes on Friday. Image: Bloomberg

After the stock market closed on Friday, Apple was barely able to cling to the top, with its market value reaching $2.892 trillion, slightly ahead of Microsoft's $2.887 trillion. So far this year, Apple stock is down 3.4 percent, while Microsoft stock is up 3.3 percent.

Microsoft is growing faster

One important factor highlighted is the price-to-earnings (P/E) valuation. Apple's P/E has doubled over the past five years, from 12.3 to 27.7 – an increase of 125 percent. While Microsoft's rating rose 46 percent, to 31.7, partly due to Microsoft's profits each year. The company's share increased much faster than that of the competitor.

Analyzes of companies' compound annual growth rates (CAGR) of sales and profits per share over the past five years also indicate a trend. Apple has grown faster than the S&P 500, but Microsoft has grown even faster. Estimates obtained from FactSet suggest that Apple's future growth will lag the index and fall far behind Microsoft.

Rapid growth usually justifies a higher stock price, so it also makes sense that Microsoft is now trading at a higher future earnings multiple than Apple's stock price. But it's hard to justify Apple's premium compared to the entire S&P 500 based on these numbers, MarketWatch wrote.

Analysts' recommendations reinforce this opinion. After a strong 2023 for both companies, the stock price is expected to see moderate growth next year, but analysts largely favor Microsoft.