Microsoft Could Overtake Apple As Most Valued Company Following Stellar Q1

Microsoft Corporation MSFT shares rallied strongly Wednesday, riding on the back of blockbuster quarterly results.

No. 1 Position In Market Cap Within Sight For Microsoft: The rally increased Microsoft's market capitalization to $2.426 trillion, which was slightly below tech giant Apple Inc. AAPL's market-cap of $2.461 trillion.

Microsoft has 7.513 billion shares outstanding compared to Apple's 16.53 billion.

Premarket trading in the shares show modest gains for both companies.

Provided Microsoft shares can sustain the earnings-induced momentum and Apple lags due to anxiety ahead of its earnings release, due after the close Thursday, Redmond could reclaim leadership in market valuation.

Related Link: Microsoft's Cloud-Powered Q1 Results Prompt Analysts To Lift Price Target

Microsoft and Apple have switched ranks as the most valuable company a few times in the past. After Cupertino held the top spot as the global company with the highest market capitalization for about eight years, Microsoft wrested the lead, although briefly, in late 2018. At that time, the two companies had market caps of a little over $800 billion.

Apple reached the milestone of a $2-trillion valuation in August 2020, the first company to do so. Microsoft was almost a year behind Apple, with Redmond reaching the milestone in June 2021.

What's Fueling The Microsoft Rally? Microsoft's first-quarter results, though showcasing broad-based strength, were propped up primarily by Cloud momentum.

Microsoft's results speak to a "cloud party" that is still in the middle innings of playing out for Microsoft, Wedbush analyst Daniel Ives said in a note, reviewing the quarterly results.

Apart from Commercial Cloud, Windows also exceeded expectations in the quarter.

These results and stronger guidance, the analyst said, will be enough to move the stock much higher into 2022.

Apple's quarterly results hold the key as to which stock will come out on top in terms of market valuation in the near term. 

In premarket trading, Microsoft shares were up 0.67% at $325.32 and Apple was advancing 0.61% at $149.76.

Related Link: Why Microsoft's Risk/Reward Is Highly Favorable