Microsoft overtakes Apple to become the world’s most valuable company in the tech industry with a trillion-dollar battle.

(Reuters) – Microsoft briefly overtook Apple as the world’s most valuable company on Thursday for the first time since 2021, after the iPhone maker’s shares started the year weak on worries about growing demand.

Microsoft’s shares have risen sharply since last year due to the company’s early leadership in generative artificial intelligence by investing in ChatGPT maker OpenAI. They rose 0.7% on Thursday, giving Microsoft a market value of $2.865 trillion.

The stock rose as much as 2% earlier in the session, briefly valuing Microsoft at $2.903 trillion.

Apple stock was down 0.9%, giving the company a market value of $2.871 trillion. Microsoft and Apple have been fighting for the top spot for years.

“It was inevitable that Microsoft would overtake Apple because Microsoft is growing faster and has more to gain from the generative AI revolution,” said D.A. Davidson analyst Gil Luria.

Microsoft has incorporated OpenAI technology into its productivity software, helping its cloud services business recover in the July-September quarter.

Apple, meanwhile, has struggled with declining demand, including for the iPhone, its biggest cash cow. Demand in the large market area of China has decreased as the country’s economy slowly recovers from the pandemic and emerging Huawei cuts its market share.

“China may slow performance in the coming years,” brokerage Redburn Atlantic said in a client note on Wednesday, downgrading Apple shares to “neutral.”

At least three of Apple’s 41 analysts have lowered their ratings since the beginning of 2024.

The Cupertino, Calif.-based company is down 3.3% in January from its last close, while Microsoft rose 1.8%.

Both stocks are expensive based on their price-to-earnings (PE) ratio, which is a common method for valuing listed companies.

According to LSEG data, Apple trades at a forward PE of 28, well above the past 10-year average of 19. Microsoft trades at about 31 times forward earnings, above the 10-year average of 24.

Apple shares, whose market capitalization peaked at $3.081 trillion on Dec. 14, ended last year up 48 percent. That was less than the 57 percent increase posted by Microsoft.

Microsoft has briefly led Apple as the most valuable company a few times since 2018, including in 2021, when concerns about supply chain disruptions due to COVID hit the iPhone maker’s stock price.

Right now, Wall Street is more positive about Microsoft. The company does not have a “sell” rating, and nearly 90% of brokerages covering the company recommend buying the stock.

Apple has two “sell” ratings, and only two-thirds of analysts covering the company rate it a “buy.”