Microsoft's cloud strategy is paying dividends and winning over market confidence.

Microsoft has overtaken Apple to emerge as the world's most valuable company on the list of top 25 global technology companies for 2018.

This is according to research conducted by data and analytics company GlobalData, which rated the top 25 global tech companies' performance from 1 January 2018 to 31 December 2018.

The rating is based on several key metrics, including market capitalisation (M Cap), revenue, price-earnings ratio (P/E), earnings per share (EPS), return on equity (ROE), return on assets (ROA), and research and development (R&D), as a percentage of sales and operating margin to assess the financial health of each company on the top 25 list.

Microsoft, which launched two local cloud data centres in March, showed a strong performance last year, earning top position. The tech giant's cloud strategy, according to the report, seems to be paying dividends and winning over market confidence.

Apple slipped to second position, while Google parent company Alphabet dropped one position from second in 2017, to third position. In fourth place was Facebook, followed by Samsung (fifth), with Intel ranking in sixth place.

Apple's latest earnings report shows the multinational technology company's first quarter earnings were above expectations, although revenue is down from the same period last year.

Keshav Kumar Jha, companies profile analyst at GlobalData, comments: "2018 has been a successful year for major enterprise software companies, during which Microsoft, Adobe, Salesforce and VMware reported double-digit increase in their M Cap.

"IT services providers such as TCS, ADP and Infosys seemed to have impressed investors with over 10% increase in their M Cap. On the other hand, major semiconductor manufacturers including Intel, Samsung, SK Hynix, Taiwan Semiconductor and Texas Instruments reported a decline in their M Cap last year."

In line with GlobalData's report, Alphabet performed slightly worse than projected in the first quarter of 2019, as all of its major sales categories performed worse than analysts' expectations.

The Google parent company was hit with a fine of $1.7 billion from the European Commission earlier this year; a third fine, following two last year.

Among the worst performers on the list was Dell Technologies (25), which reported negative earnings, relative to shareholders' equity, revenue, operating costs and assets.

South Korean supplier of memory chips and flash memory chips SK Hynix ranked at 24, with technology services and consulting firm Infosys at 23.

* Image supplied by GlobalData

Among the top 25 players, nearly 70% of companies achieved double-digit revenue growth, with gaming company NVIDIA (40.6%) and SK Hynix (37.9%) topping the list, notes GlobalData.

Collectively, the top 25 registered an average operating margin of 25.3%, indicating successful cost containment efforts, of which 22 players recorded a double-digit operating margin.

The top 15 players reported an average of 27.2% ROE and 21 companies registered double-digit ROE. The average ROA stood at 14.6%, with 13 players reporting above average ROA.

Jha adds: "With a cash and short-term investment pile of $7.1 billion, NVIDIA leads the group in terms of liquidity. Of the top 25 firms, 12 players reported a current ratio of above average."

GlobalData's analysis reveals optimistic investor sentiment helped the top 25 stocks to trade at an average P/E of 36.6. The consistently negative P/E ratio of Dell Technologies shows the company is failing to generate profit.

All the top players continued to focus on R&D activities, with an average R&D to sales ratio of 11.3%. Nearly 50% of the companies featured above this average, notes the report.