Second downgrade for Apple. And now Microsoft undermines the sceptre on Wall Street

A few days ago we wrote how 2024 was a year full of pitfalls for Apple.And judging by the way the Cupertino giant has started this new year on Wall Street, the pitfalls already seem to have emerged.

After that of Barclays, Apple took its second downgrade in a week. Piper Sandler &Co downgraded the Tim Cook-led company's rating from 'overweight' to 'neutral', citing the weak macroeconomic environment in China that will weigh on iPhone demand. A revision that further aggravated Apple's already difficult week on Wall Street.

Since the beginning of the year, in fact, the stock of the most capitalised company in the world has lost about 5%, burning about 170 billion dollars of market cap. A trend that worries investors, after Apple's stock had gained about 50% in 2023, breaking the 3 trillion dollar capitalisation wall. Today, however, the leadership on Wall Street (which has lasted for years) is being challenged by Microsoft.The two companies are separated by 'only' 60 billion in capitalisation, an absolutely meagre figure for giants with trillion-dollar market caps.

And after all, the last time Apple lost the sceptre of queen on the New York Stock Exchange was in 2019, when Microsoft took the lead for a few months. At the time, both companies were hovering over market capitalisations of $1 trillion.Today they have tripled that value, although now the outlook looks different. While Apple remains anchored to iPhone sales (which make more than 50 per cent of its annual turnover), Microsoft is launched full speed ahead in the generative artificial intelligence business, with investments in ChatGPT and the development of Copilot. Two quite distant keys, in today's view of the market. And that is why Microsoft seems close to overtaking.

Also because, as we said at the beginning, for Apple came the second downgrade in a week. "We are concerned about mobile phone stocks in the first half of 2024 and believe that unit sales growth rates have peaked.... The deteriorating macroeconomic environment in China could also weigh on the mobile phone business," wrote Harsh Kumar, an analyst at Piper Sandler, in a note to clients.