Apple vs. Microsoft: Which AI Stock Is the Better Buy Right Now?

Core Insights - The article compares Apple and Microsoft as they navigate the challenges and opportunities in the AI sector, questioning which company is better positioned for future AI-driven returns [3]. Group 1: Apple - Apple's business is maturing, with iPhone sales, which account for over 50% of revenue, plateauing [5]. - Despite adopting AI across its ecosystem, including enhancements to Siri and AI-powered features, the company has not seen an acceleration in the upgrade cycle, resulting in slower growth [6][8]. - In the trailing 12 months ending June 28, Apple reported net sales of $409 billion, a 6% year-over-year increase, but net income decreased to $99 billion from $102 billion the previous year [7]. Group 2: Microsoft - Microsoft, being more software-oriented, is heavily reliant on AI for its success, with Azure being critical for running AI models [9]. - The company has integrated AI into its legacy products and has shifted its strategy to develop AI capabilities internally after limitations in its partnership with OpenAI [10]. - In fiscal 2025, Microsoft reported $282 billion in revenue, a 15% annual increase, with net income climbing to $102 billion, a 16% increase [11]. Group 3: Investment Comparison - Both Apple and Microsoft have not impressed the market with their AI offerings, and both have similar P/E ratios around 36 [12]. - However, Microsoft is experiencing faster revenue and profit growth, which may provide a competitive edge in terms of market returns [13].