Microsoft has regained its title as the world's most valuable publicly traded company on Friday, following Apple's weak quarterly earnings update.
Microsoft's Friday gain of 2.2 percent lifted its market value to $2.49 trillion. Apple lost 1.9 percent to bring its market capital to $2.46 trillion.
Microsoft announced this week that it saw its third quarter revenues rise due to a surge in cloud computing, which was fueled by the pandemic and shift to remote work. The quarterly revenue of the company grew by 22 percent, its biggest gain since 2014.
Rishi Jaluria from RBC Capital Markets said that we are still at the beginning of digital transformation and Microsoft is benefiting. He noted that Microsoft's cloud software Azure has gained ground over its dominant competitor, Amazon Web Services.
Apple's forecasts were not met in the results of Apple's analysts, which were released after markets close on Thursday evening. This was due to chip shortages and disruptions caused by the coronavirus pandemic.
Since 2010, when Apple overtook Microsoft, Microsoft and Apple have been vying for the title of most highly valued public company. Apple retained its position until 2018.
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In 2020, Microsoft was the last company to rally above Apple during the pandemic-induced selloff. The stock has increased more than 7 percent in the past week, bringing its year-to date gains to nearly 50 percent.
Amazon, another tech giant, dropped 2.2 percent Friday after warnings that rising labor costs would impact its earnings for the remainder of the year. Amazon, valued at $1.7 trillion, ranks fourth in market capitalization and is second only to Google parent Alphabet.
These disappointing updates were in contrast to several other tech groups, such as Alphabet, which reported earlier in week. Alphabet's strong results helped the tech-heavy Nasdaq Composite catch pace with equity markets and surpass its September record.
The Nasdaq Composite recovered from its early losses Friday and rose 0.3 percent to finish the week at 2.7 percent.
However, the market's weaker performance this past year indicates that investors are shifting away from technology stocks which led to a higher market, and toward more cyclical businesses set to benefit from economic recovery.
The worst performing sector of the S&P 500 was tech stocks in the first quarter. This was because there were expectations that a reopening trade would be opened for companies affected by the pandemic. Tech stocks experienced a resurgence in the second quarter and regained their lead gains. However, they lost ground to communication and financial stocks in the third quarter.
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