Microsoft has overtaken oil giant Exxon Mobil to become the world's most valuable company ranking second next to iPhone maker Apple Inc.

Microsoft appears to have benefitted from the leadership of its new CEO Satya Nadella who introduced drastic changes to restructure the company that has been struggling with the declining market in personal computers.

Under Nadella's lead, Microsoft now focuses on mobile technology and web-based cloud services and while cutting jobs and company expenses may have brought ire from those affected, Nadella's strategy appeared to have worked.

At the end of May, Microsoft is fourth on Forbes list of largest companies in the world based on market capitalization but Nadella's effort is seen to have positively influenced the turnaround of the company, which has now overtaken Exxon Mobil that held the second spot earlier this year.

Exxon's stock currently has a market capitalization of $402.66bn, down from $483.1bn earlier this year. Investors, on the other hand, seemed to be pleased with Nadella refocusing on cloud services and undoing the mistakes of Windows 8 thus Microsoft is marked with stock surges. The price of the company's shares has increased more than 30 percent over the year, its highest in a decade.

"Microsoft has made a strategic change," FBR Capital Markets tech analyst Daniel Ives told the Associated Press. "Microsoft has done the best job of trying to skate where the puck is going."

In May, the total market value of Microsoft was $343.8bn but it shares closed at $49.58 on Friday, Nov. 14, giving it a corresponding market value of $408.7 billion, exceeding that of Exxon's which has fallen by more than 6 percent because of plummeting oil prices.

Although Microsoft has obviously done better compared with other tech stalwarts Oracle, IBM and Hewlett-Packard, it continues to face the challenges of Apple's dominance. In the mobile industry, people refer to the company's Surface tablets as "iPads" and even "knockoff iPads."

"There is a lot of catching up to do," said David Reibstein, University of Pennsylvania's Wharton School professor of marketing. "They are going to have to work to overcome the brand disadvantage they have in those areas."

Clearly, Apple still has the upper hand in the industry with Forbes ranking it as the most valuable brand. Forbes latest list of the world's most valuable brand is dominated by tech giants with tech companies Apple, Microsoft and Google getting the top three spots followed by Coca-Cola and IBM ranking fourth and fifth respectively.

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