Microsoft vs. Apple stock: how do they compare?

When it comes to Microsoft vs Apple stock, there are differences and similarities. Which one might make the best investment?

Contents

You are highly likely to be reading this article with the help of technology developed by either Apple or Microsoft – the two tech giants that are locked in a battle for dominance. It is entirely possible that neither side will ever truly come out on top, but it is still worth taking a look at how the companies are doing, and what some people think could, potentially, happen to them when comparing Microsoft (MSFT) vs Apple (AAPL) stock.

What we are not going to do is to talk about which stock – AAPL or MSFT – is better. This is because, while the question might sound straightforward, there is no real answer. Anyone who says otherwise is either wrong or a liar. All we can do is tell you what has happened, let you know what some experts are predicting (while noting that predictions are very often wrong(, and allow you to make up your own mind about the subject. Remember, you can invest in both companies, or you can invest in neither. It is not a straight-up either/or situation.

Apple’s latest news

Apple released its most recent quarterly update in late July. The report made good reading for investors in the tech giant. The company’s sales were up 36% from the same quarter the year before and sales of its flagship product, the iPhone, had risen by 50%. However, this good news was tempered by the company warning that sales in the current quarter would not be as strong as sales in the quarter ending 26 June because of the continuing shortage of chips.

It could be argued that the Californian company’s bosses’s warning should be viewed in the light of how well Apple did compared to predictions made by analysts who were questioned by Refinitiv. According to CNBC, Apple’s earnings per share (EPS) stood at $1.30, against the average analysts' prediction of $1.03; overall revenue stood at $81.41bn, as opposed to the $73.30bn average forecast; and  iPhone revenue was up almost 50% year-on-year to $39.57bn, beating the predicted $34.01bn.

Apple’s success across the quarter was down, in part, to continuing COVID-19 restrictions resulting in a strong stabilisation of the number of people working from home. Indeed, this could be seen in the 16% growth in its Mac (computers) revenue, rising to $8.24bn, up slightly from the predicted $8.07bn. 

In a statement, Tim Cook, Apple’s CEO, said: “This quarter, our teams built on a period of unmatched innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important. We’re continuing to press forward in our work to infuse everything we make with the values that define us by inspiring a new generation of developers to learn to code, moving closer to our 2030 environment goal and engaging in the urgent work of building a more equitable future.”

Cook went on to tell CNBC that, had it not been for the chip shortages, the company would probably have done better. He said: “The shortage primarily affected Mac and iPad. We had predicted the shortages to total $3bn–$4bn. But we were actually able to mitigate some of that, and we came in at the lower-than-the-low-end part of that range.”

There are now 700 million people who have some kind of Apple subscription, including people who have subscriptions to iPhone and iPad apps. However, the positive news was offset by the market’s reaction to the warnings about chip shortages, which saw the Apple share price fall from $146.77 at close of trading on 27 July to $144.81 on 28 July after the results were published – a drop of just over 1.33%.

AAPL price history

Date Close Change Change(%) Open High Low
Jan 25, 2022 159.43 -1.64 -1.02% 161.07 161.09 159.23
Jan 24, 2022 161.06 -1.88 -1.15% 162.94 163.01 154.63
Jan 21, 2022 162.38 -1.04 -0.64% 163.42 166.24 162.27
Jan 20, 2022 163.36 -2.01 -1.22% 165.37 169.52 162.18
Jan 19, 2022 165.37 -4.05 -2.39% 169.42 170.98 164.93
Jan 18, 2022 169.45 -0.39 -0.23% 169.84 172.44 169.32
Jan 14, 2022 173.23 1.01 0.59% 172.22 173.70 170.22
Jan 13, 2022 172.22 -2.87 -1.64% 175.09 176.54 171.71
Jan 12, 2022 175.08 0.08 0.05% 175.00 177.08 174.52
Jan 11, 2022 175.01 2.40 1.39% 172.61 175.09 170.74
Jan 10, 2022 172.66 0.39 0.23% 172.27 172.76 168.09
Jan 7, 2022 171.92 -0.58 -0.34% 172.50 174.05 170.95
Jan 6, 2022 172.50 -2.50 -1.43% 175.00 175.20 171.56
Jan 5, 2022 174.93 -4.32 -2.41% 179.25 180.12 174.00
Jan 4, 2022 179.25 -2.58 -1.42% 181.83 183.27 179.05
Jan 3, 2022 181.83 3.91 2.20% 177.92 182.79 177.42
Dec 31, 2021 177.40 -0.72 -0.40% 178.12 179.12 177.04
Dec 30, 2021 178.12 -0.81 -0.45% 178.93 180.48 177.82
Dec 29, 2021 178.94 -0.74 -0.41% 179.68 180.54 178.06
Dec 28, 2021 179.68 -0.34 -0.19% 180.02 181.24 178.45

Microsoft update

Microsoft released its quarterly results on the very same day – 26 July – as its great rival. The Seattle-area firm saw its revenue go up by 21% to $46.15bn, compared to the same quarter of the previous year, with the company’s net income also up by 47%. 

If we look into how various parts of the business did across the course of the quarter, we can see that revenue from Microsoft’s Productivity and Business Processes sector – which is responsible for its Office software (commercial and consumer), the LinkedIn social network and Dynamics business solutions – was up by 25% year-on-year at $14.69bn.

Meanwhile, the More Personal Computing unit – which is responsible for the Windows operating system, gaming and search advertising – made $14.09bn, up 9% year-on-year. In the quarter overall, operating income of $19.1bn was up 42%, net income of $16.5bn was up 47%. 

According to CNBC, the company’s adjusted EPS of $2.17, up 49% from the previous year, comfortably beat the $1.92 average predicted by the analysts Refinitiv consulted. Microsoft issued guidance stating that its revenue for the next quarter from Productivity & Business Processes would stand at somewhere between $14.5bn and $14.75bn, while More Personal Computing would be somewhere between $12.4bn and $12.8bn.

Microsoft’s chief finance officer and executive vice president, Amy Hood, said in a statement: “As we closed out the fiscal year, our sales teams and partners delivered a strong quarter, with over 20% top- and bottom-line growth, highlighted by commercial bookings growth of 30% year-over-year. Our commercial cloud revenue grew 36% year-over-year to $19.5bn.”

The markets responded positively to the news from Microsoft. When markets closed on 26 July, the company’s share price was $289.05 and when they reopened on 27 July, after the results, they stood at $289.43. That may have only been a price rise of 0.13%, but it was a price rise nevertheless.

Anyway, that’s the story of AAPL vs MSFT in the most recent results. But what else can we look at?

Stock growth and market cap

Microsoft price chart
Microsoft price chart (Picture - currency.com)
Apple price chart
Apple price chart (Picture - currency,com)

Both companies have seen their stock prices rise over the course of 2021. Microsoft stood at $222.42 at the end of 2020 and at close of trading on 26 August, the share price was $299.09, representing a rise of 34%.

Meanwhile, Apple was worth $132.69 at close of play on 31 December 2020, standing at $147.54 at the end of trading on 26 August 2021. This meant the company’s stock has gone up just over 11%. In fact, in the 10 years since Tim Cook became CEO, the Apple share price has increased by more than 1,200%. It was this growth that meant Cook was awarded five million shares in the company, which he sold for around $750m. 

In terms of market cap, Microsoft stands at a massive $2.247trn, making it the second most-valuable company by that particular statistic. However, the one company that has a larger market cap is Apple, which stands at a whopping $2.438trn. Clearly, these two companies are the biggest dogs in the tech yard. But what of the future in terms of Microsoft vs Apple stock?

What is the outlook for the future?

A CNN  poll of 38 analysts saw a median Apple stock forecast of $168 over 12 months, representing a price increase of 13.9%. The highest Apple stock forecast for 2021 and 2022 went up 28.8% to $190, but the lowest Apple stock prediction was $90, representing a loss of 39%.

Meanwhile, 43 analysts were polled for their investment recommendations, with 27 suggesting buying Apple stock, five saying it would outperform expectations and eight saying to hold. Just one said it would underperform, while two suggested selling.

For Microsoft, CNN polled 33 analysts for their 12-month Microsoft stock predictions. The median Microsoft stock forecast for 2021 and 2022 would see it reach $330, an increase of 10.3%. The highest Microsoft stock forecast would see it go up 37.4% to $411, but the lowest forecast is $260, which would see the price drop by 13.1%.

CNN also asked 38 analysts to give their investment recommendations. The majority, 33, said to buy Microsoft stock, while two said it would outperform expectations. Another three said to hold. No one suggested the stock would underperform or that investors should sell it. 

FAQs

It could be. The forecasts are largely positive, although there are some analysts who appear to be striking a note of caution. That said, you need to remember stocks can go down as well as up, and you should never invest more money than you can afford to lose.

It is, potentially, although there are some experts who recommend against buying it. Predictions are very often wrong, and you will need to do your own research before you commit to investing in Apple.

Many analysts think that AAPL will go up, but there are some who think it will lose its value. This is a good reason to be cautious, not just when it comes to buying Apple stock, but also regarding in trading in general.

We don’t really know, but it is worth pointing out that WalletInvestor says it will be worth $610.307 in five years, while gov.capital gives an average forecast of $1,300.162. That said, predictions, especially long-term ones, are very often incorrect, so you should take them with a pinch of salt and not be too surprised if they are well off the mark. 

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
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