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Data: stockrow.com, Yahoo! Finance; Chart: Harry Stevens/Axios

Microsoft is now neck and neck with Apple for the title of most valuable company in the world.: At market close on Monday, Microsoft was worth $817 billion, just shy of Apple's $829 billion, That comes amid a steady two-year climb for Microsoft and a recent steep drop in Apple's valuation, which topped $1 trillion not long ago.

Bottom line: The story isn't just about the drop in Apple shares, but also the resilience of Microsoft despite having lost its seat at the cool kids' table. This year alone, Microsoft surged past Amazon and Google parent Alphabet.

How is that?: Microsoft has gradually moved from a consumer and business PC company to one that is increasingly focused on the less sexy, but highly profitable data center.

Yes, but: Aren't PC sales flat? They are. But Microsoft has managed to offset that with a fast-growing business in cloud computing. Sales from Windows, even when combined with Surface and Xbox, account for just 36% of revenue, per The Verge.

What they're saying:

  • Bloomberg's Shira Ovide: "Microsoft is the tortoise in a technology world obsessed with hares. We know how that race turned out."
  • Business Insider's Kif Leswing: "The last time Microsoft was more valuable than Apple: The current iPhone was the 3GS. If you wanted to install Windows 7 it came on a CD. Instagram did not yet exist. Barack Obama was finishing out the first half of his first term."

History lesson: Apple and Microsoft have been rivals in the PC world since its early days. When it comes to valuation, though, they have spent most of their history far apart.

  • Apple went public before Microsoft (1980 vs. 1986) but Microsoft quickly eclipsed Apple in value and held the lead for the first two decades or so of the PC era, even having to bail Apple out with a $150 million cash infusion back in August 1997.
  • Buoyed by the iPhone, Apple surged back, overtaking Microsoft. It held the lead continuously over Microsoft until Monday, when Apple briefly dropped below the software giant, before closing at a slightly higher valuation.

But, but, but: The longer view you take, the more you need to think about adjusting for inflation. Today's $800 billion company isn't the same as $800 billion two decades ago.

Bottom line: Market cap is not an indication of innovation, but it does show where Wall Street is placing its bets on the future.

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