Apple loses the title of "the most valuable company in the world" to Microsoft after its Q4 revenue fails to meet expectations
Apple has failed to meet its Q4 revenue targets. In its final quarterly investor call for 2021, Apple reported US$83.36 billion in revenue, a 29% growth. The projected revenue for the quarter was US$84.85 billion. Explaining the drop in revenue, CEO Tim Cook told CNBC,” We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $6 billion. The supply constraints were driven by the industry wide chip shortages that have been talked about a lot, and COVID-related manufacturing disruptions in Southeast Asia.”
All of Apple’s products, including software and services, saw annual growth. iPhone revenue came in at US$38.87 billion, a 47% year-over-year increase. Services revenue increased 24.6% to US$18.28 billion. Mac revenue ended up at US$9.18 billion, a 1.6% annual growth. Coming in at US$8.25 billion, iPad revenue also saw a 21.4% increase. Other products, including the Apple Watch and AirPods, brought in US$8.79 billion after experiencing 11.5% annual growth.
The lower-than-anticipated Q4 numbers have resulted in Apple shares dropping 4% on Friday morning, resulting in Apple losing its position as the most valuable company in the world to Microsoft. Microsoft now enjoys a market value of US$2.46 trillion, beating Apple’s valuation of US$2.43 trillion. Microsoft's lead over Apple follows a strong earnings report that saw its shares rise 0.9%. The Windows-maker saw its quarterly revenue grow by 22% despite the ongoing chip shortage, all thanks to the stellar performance of the Office business and cloud services.
This is not the first time that Microsoft has overtaken Apple. The company saw its value rise above Apple's in July 2020. However, Apple retook the lead in the following month. Something similar can happen if the supply chain constraints ease to let Apple meet iPhone 13's strong demand.