Apple (AAPL) only needed two words to send its market capitalization above that of Microsoft (MSFT): Apple Intelligence.
For three straight days, shares traded higher as Apple stock defied investors skeptical of its waning iPhone sales in China. Markets switched their sentiment from extreme bearish to bullish. Although Microsoft is the more attractive investment, thanks to its cash flow growth in cloud, AI, productivity, gaming (through Activision), and enterprise software, it is now out of favor.
With Apple, history could repeat itself. Markets expect the iPhone platform to attract AI use with ease. Microsoft launched CoPilot (powered by ChatGPT) before everyone else. However, winning market share requires customers to use Bing search. Changing a person’s habit away from Google (GOOG) search to Bing is a challenge.
Adobe Soars 15%
Adobe stock will open at least 15% higher today. After relentless selling throughout 2024, the firm posted earnings per share of $4.48. Revenue increased by 10.2% Y/Y to $5.31 billion. Markets are not concerned that the Q3 revenue outlook of up to $5.38 billion will miss the $5.40 billion consensus target. For the year, revenue will beat estimates, thanks to annual recurring revenue from digital media.
Adobe needs to consider splitting shares and initiating a dividend. It should pass its savings from not buying Figma to shareholders.
