Following a dizzying ascent, Apple has eased some of its record gains. Breaking the $500 billion market capitalization benchmark, Apple’s rise in the public markets became a narrative in and of itself. As the company’s products became cultural icons as well as bestselling devices and services, the company appeared all but unconquerable.

When the U.S. ran short of cash during its debt ceiling internecine warfare, Apple’s reserves perhaps passed that of the federal government. Putting that in perspective, Apple now has $45 billion more in cash than it did at that time. Today, in mid-day trading on the last day of the year, the company is worth $492.5 billion, at a price earnings ratio of 11.85.

It was worth much, much more earlier in the year, as you know. Apple’s stock price has declined from $700 a share to just $524, a sharp backwards movement for a company that has had what can only be described as an historic run from poverty to world’s most valuable corporation.

What’s interesting to note is that even as Apple’s fortunes in the market went from storied growth to pilloried deflation, the company has held onto a strong full-year increase in its stock price: Apple is up just under 30% in 2012, having started the year with a stock price of $405. The final trading day recorded was December 30th due to the 31st and 1st being a weekend.

That’s not an increase to be sniffed at. The Dow Jones Industrial Average rose a mere 6%, meaning that Apple rose at a pace 5 times as fast as the broadest market index.

Microsoft

Microsoft too saw a year of gains, followed by a late-year decline. However, in the case of the Redmond software giant, Microsoft didn’t manage to hold onto much of its earlier market cap growth.

The company peaked at $32.6 a share, up 26% from its starting point of the year. At that point, it appeared that Microsoft had found a new gear at last; following years of flat graphs, the storied technology firm was poised to deliver more than a dividend for the year.

Then it all went soft. By mid-day trading today, Microsoft has let go of nearly all its gains, settling around $26.5. That represents a miserly 2.1% increase for the last 12 months. The company is currently yielding 3.5%, so investors in the firm have that to think on, but compared to Apple’s 30% gain, Microsoft’s combined – and we’re being sloppy here – 5.6% return pales.

Microsoft and Apple have much to prove. Apple needs to demonstrate that it has new products in the pipeline to continue its rapid revenue and earnings growth, and that its aging device lines can retain their momentum into middle age. Microsoft has to show that Windows 8 can hold its own, and that the gains it has finally ground out in the mobile space are sparks towards a larger inferno.

What the companies share is their low multiples: the market is pricing both as if they each will not show much growth in the coming years. If that is prescient or folly will be known as the numbers unfold.

Top Image Credit: Emmanuel Huybrechts