Technology giant Microsoft (NASDAQ:MSFT) is poised to overtake iPhone maker Apple (NASDAQ:AAPL) as the world’s most valuable company, thanks to Artificial Intelligence (AI)-induced tailwinds. MSFT stock closed 1.86% higher on January 10, reaching a market capitalization of $2.85 trillion, closely trailing Apple, which currently holds a market cap of $2.9 trillion.
Microsoft’s aggressive investments in AI technology and its seamless integration into its product offerings could continue to propel its stock on a positive trajectory. Conversely, Apple faces challenges such as soft hardware sales, including weakened demand for the iPhone, and concerns about its valuation, which may constrain the upside potential for AAPL stock.
The chart below shows that MSFT stock has appreciated about 64% in one year, outperforming Apple’s gain of 42%.
Against this backdrop, let’s look at the Street’s forecast for MSFT and AAPL stocks.
What is the Prediction for Microsoft stock?
Wall Street analysts are bullish about Microsoft’s prospects. DBS analyst Sachin Mittal reiterated a Buy on MSFT stock on January 8. The analyst increased the price target to $445 from $437 per share.
Mittal highlighted that MSFT stock warrants a premium over AAPL stock due to its higher earnings growth potential. Moreover, the analyst added that MSFT has a higher mix of recurring revenue, which is in contrast to AAPL’s extensive mix of transactional revenue. Further, Mittal said that Microsoft is less exposed to cyclical revenue streams than its peers.
Among the 37 analysts covering MSFT stock, 36 recommend a Buy. Analysts’ average price target of $427.48 implies upside potential of 11.68% from current levels.
Is Apple Stock a Buy or Sell?
While Wall Street is bullish about MSFT stock, they remain cautiously optimistic about AAPL’s prospects. It’s worth mentioning that Apple stock has been hit with its third downgrade this month. On January 10, Redburn Atlantic analyst James Cordwell downgraded Apple stock to Hold, citing concerns about valuation and growth and growing regulatory risks.
Earlier, Piper Sandler and Barclays analysts downgraded AAPL stock to Hold due to valuation concerns and the iPhone 15’s lackluster performance.
Apple stock has 22 Buys, nine Holds, and one Sell recommendation for a Moderate Buy consensus rating. Analysts’ average price target of $203.17 implies 9.12% upside potential.
