Apple and Microsoft Corp. have pushed the Dow Jones Industrial Average to break through 28,000 points for the first time earlier this month, a milestone that underscores just how much the two U.S. tech giants have affected major stock indexes. Apple and Microsoft’s battle for the title of the top U.S. company by market capitalisation has also boosted overall technology stocks, buoyed by a positive trading environment and steady growth in corporate profits. Apple’s shares have surged 66 percent this year, giving it a $1.16 trillion market cap. Revenue growth in the service business and products other than the iPhone has further boosted enthusiasm for Apple’s stock.
Today, Apple and Microsoft, with a market capitalisation of more than $2.3 trillion, have outpaced many other rivals in the market, and the surge in share prices has put them ahead of Amazon.com Inc., Google’s parent company Alphabet.
How much does Apple and Microsoft have an impact on the stock market? Let’s look at a set of data:
Energy stocks in the Standard and Poor’s 500-stock index underperformed the broader market as oil and gas prices stagnated. The combined market capitalisations of Apple and Microsoft are now twice as high as the total energy stocks. Energy stocks, which include energy giants such as Exxon Mobil and Chevron, have fallen more than 9 per cent in the past year. Investors expect steady production in the U.S. and other countries to dampen oil and gas revenues.
Apple, Microsoft’s total market capitalization exceeds the standard of the P500 index 5 stocks
The market capitalisations of the two duo also exceed the combined market capitalisation of all constituent stocks in the Russell 2000. The small-cap index is up 18 percent this year, less than the 24 percent gain in the Standard and Poor’s 500-stock index. Earlier this year, the Russell 2000, along with banks and other economic-vulnerable companies, fell, but so-called cyclical stocks have rebounded recently.
At the same time, Apple and Microsoft’s total market capitalisation exceeds the combined value of the 197 smallest companies in the S.P. 500, according to Dow Jones market data, and is higher than the market capitalisation of consumer necessities, materials, real estate and utilities in the index.
For Apple, the company has benefited from steady revenue growth in North and South America, reflecting a broadtrend that domestic consumer spending has boosted stock performance even as economic activity has stagnated elsewhere. Apple’s Americas sales rose for the third year in a row in the fiscal year ending September 2019, helping apple offset a decline in the company’s revenue in Europe and Greater China.
Market value trends since the end of 2017
Apple relied on growth in its services business and products other than the iPhone to ease the decline in sales of flagship products, while Microsoft used its cloud computing division to boost the company’s share price, including the Azure product line. Revenue in Microsoft’s cloud computing division nearly doubled in the fiscal year ended June 2019 compared with fiscal 2014.
In addition, the two giants have recently outstripped rivals such as Amazon and Alphabet, which have worried investors with rising costs and tougher regulation. Amazon’s shares are up 16 percent this year, Alphabet is up 24 percent, and the two companies are at least $250 billion behind Apple and Microsoft combined. Apple and Microsoft’s shares are still cheaper than their peers such as Amazon, and Apple’s is cheaper than overall technology stocks, based on price-to-earnings ratios over the past year.
Shares in Apple and Microsoft are on track for their best annual performance since 2009. Microsoft’s share price is on the cards for its eighth consecutive year of growth, ignoring the decline in the broader S.P. 500 in 2015 and 2018.