Microsoft's Valuation Catches Up To Apple — How Did It Happen?

Microsoft Corporation MSFT briefly passsed Apple Inc. AAPL as the world’s most valuable company Monday. 

Apple has been on a staggering trajectory in the decade since the iPhone was released, and in the process made Microsoft look like a technology company of the past. A quick comparison of the companies' retail stores at a local mall usually shows the divergence in consumer inerest in the brands; Microsoft simply failed to capitalize on the mobile revolution.

This makes Microsoft valuation move even more remarkable — marking the first time since 2010 that the company is valued higher than Apple — and could potentially reignite the conversation surrounding one of technology’s biggest rivalries.

So how did Microsoft quietly stage an epic comeback?

Nadella Steps In

CEO Satya Nadella deserves a great deal of credit. When he took over in 2014, the executive said he wanted to focus on subscription-based business and the cloud.

Microsoft’s cloud-computing unit Azure has grown at a blistering pace; it's up 76 percent annually and remains the biggest competitor to Amazon.com, Inc. AMZN’s AWS.

Microsoft is one of the few technology companies that emerged relatively unscathed from the recent sell-off in tech stocks. 

Apple’s valuation has been in a freefall since passing the $1-trillion mark in August, and shares have fallen 22 percent after the issuance of relatively weak first-quarter guidance and despite Cupertino's Q4 earnings beat.

Apple’s decision to stop reporting iPhone unit sales was a notably unpopular move among investors and prompted fear of a sales slowdown.

Conversely, Microsoft reported a healthy Q1 earnings beat Oct. 24, and issued strong Q2 commercial sales guidance, projecting 19-percent growth year-over-year. The company’s shares are up over 4 percent since its last earnings report and are now up 24-percent year-to-date.

While Apple quickly regained the title of the world’s most valuable company, Microsoft is now nipping at its heels and it begs the question: what would the business world look like if the company had more of a mobile edge? 

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Photo courtesy of Microsoft.