Apple overtook Microsoft to regain its title as the world’s most valuable company, the latest sign of improving investor sentiment over its growth and position with artificial intelligence.

The milestone followed a blistering rally, including Apple’s biggest three-day advance since August 2020. It closed with a market capitalisation of US$3.285-trillion, compared with Microsoft at $3.282-trillion. This is the first time since January that Apple closed with a higher market value than Microsoft, and it represents the latest reshuffling of the ranks of Wall Street’s largest stocks. Earlier this week, Apple closed in third place behind Nvidia.

“People have a high degree of conviction that they will be an AI winner, and it seems like this is a market where if you’re an AI winner, you’re being bid up a lot,” said Rhys Williams, chief strategist at Wayve Capital Management. “I assume both Microsoft and Apple will be somewhat of a horse race for the foreseeable future with Nvidia also in contention.”

The Cupertino, California-based company rose 0.6% on Thursday, its third straight positive session, which also included the largest one-day percentage gain since November 2022 on Tuesday. The three-day jump of about 11% added a staggering $323.9-billion to its market capitalisation. That’s bigger than all but a handful of components in the S&P 500 Index.

Microsoft rose 0.1% on Thursday.

The catalyst for the gains was Apple’s AI-focused Worldwide Developers Conference presentation on Monday, which fuelled hopes that customers will pay up for the next generation of iPhones, spurring a long-awaited rebound in growth. Revenue fell 4.3% in Apple’s fiscal second quarter, the fifth contraction in the past six quarters.

“AI functionality is likely to drive a multi-year upgrade cycle from faster replacement, more switching and ASP increases,” wrote Bank of America analyst Wamsi Mohan, referring to average selling prices. “Apple Intelligence can drive a significant upgrade cycle and consensus estimates are too low.”

Buyback plan

The AI event came in the wake of a positive quarterly report in early May, when Apple also announced a $110-billion buyback plan, the largest buyback programme in US history.

Even with the recent strength, concerns about growth have capped Apple’s gain relative to the rest of big tech.

Thursday’s rally pushed Apple’s gain in 2024 to 11%, below the Nasdaq 100 Index’s 16% advance. Stocks with more concrete AI exposure — including Microsoft, Amazon.com, Alphabet and Meta Platforms — have all outperformed Apple this year. Nvidia has soared more than 160%. — Ryan Vlastelica, with Carmen Reinicke, (c) 2024 Bloomberg LP