It's not easy being Apple (NASDAQ:AAPL) these days. The tech giant saw its shares close lower in 2015 -- the first time that Apple investors have suffered an annual decline since 2008 -- and 2016 isn't off to a good start.
Weakness in Apple fueled by fears of slowing iPhone sales and contracting margins have taken a toll. Apple stock has closed in the double digits for seven consecutive trading days, something that hasn't happened since late 2014.
Apple's market cap has fallen to $538.5 billion, a far cry from when it was approaching $750 billion when it peaked last April. Other tech giants have been closing the gap, and it's quite possible that one of them could make a big push to overtake Apple on a market cap basis. It would happen even sooner on an enterprise value basis given Apple's bountiful cash position, but let's stick to market cap for now.
Let's go over three of the bellwethers that could overtake Apple if the class act of Cupertino doesn't turn market sentiment around in 2016.
Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL)
We may as well start with Google's parent company. It is already nipping at Apple's heels with its $483.1 billion valuation. All it would take would be an 11.5% gain or a commensurate dip in Apple stock to make that happen.
Analysts see Alphabet's revenue growth accelerating to a 16% clip in 2016. This comes at a time when Wall Street pros see Apple's top line decelerating to less than 2% growth in its fiscal 2016. Apple is generating a lot more in revenue and earnings -- and clocks in with comparable net margins -- but a divergence in margins can happen if Apple is forced to cut prices to increase iPhone unit volume in the future.
Microsoft (NASDAQ: MSFT)
It's been nearly six years since Apple flashed its high beams at Microsoft, overtaking the world's largest software company for the market cap lead on the open road. Mr. Softy is pretty far behind now with its $407.3 billion price tag, but it did close the gap last year.
Microsoft has been a victim of the smartphone revolution. It's the undisputed champ in PC operating systems, but it's a distant third in mobile operating systems. Last year's release of Windows 10 is hoping to woo users back to the PC, topping 110 million devices running the new platform just a few months after its June release. It also isn't standing still on productivity software, server tools, and video gaming. It may be a surprise to find Microsoft flashing its high beams this year -- asking Apple to switch lanes so it could drive past the iEverything company -- but it could happen if last year's stock charts play out in similar fashion this year.
The world's leading online retailer may seem like a long shot to rip the crown off of Apple's head. It stands at a market cap of just $267.3 billion. However, did you see what happened last year? Amazon's stock soared 118%, just as Apple's stock slipped by 5% on the year. If Amazon more than doubles again in 2016 and Apple stages another retreat it would find Amazon pulling ahead.
In fact, if Microsoft improves on last year's 19% pop and Alphabet comes through with even a sliver of last year's 47% surge we could be seeing all three contenders pull ahead of Apple. These scenarios may seem unlikely, but it's hard to dismiss momentum. Amazon has it as it makes the most of its market dominance in online sales to push into new market categories. Apple, on the other hand, is suffering by having too much riding on the success of the iPhone 6s.
Apple could turn things around, but it wouldn't be a surprise if Alphabet, Microsoft, and possibly even Amazon close out 2016 as the most valuable U.S. company based on market cap.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon.com, and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.