MSFT vs. AAPL: Which Mega-Cap Tech Stock is the Better Buy Now?

Core Insights - Microsoft and Apple are two leading technology companies with a combined market capitalization exceeding $7.5 trillion, both showing solid quarterly results in fiscal 2025, but their growth trajectories are diverging [1] Microsoft (MSFT) Analysis - Microsoft reported exceptional fourth-quarter fiscal 2025 results with revenues of $76.4 billion, an 18% year-over-year increase, driven by strong momentum in its cloud and AI portfolio [2] - Azure's growth accelerated to 39% in the fourth quarter, surpassing analyst expectations and outpacing competitors AWS and Google Cloud, which grew by 17% and 28% respectively [2] - The AI business achieved a $13 billion annual revenue run rate, up 175% year over year, indicating successful monetization of AI investments [3] - Microsoft has a contracted backlog of $368 billion and commercial bookings exceeding $100 billion for the first time, with guidance for double-digit revenue and operating income growth in fiscal 2026 [4] - The Zacks Consensus Estimate for Microsoft's first-quarter fiscal 2026 earnings is $3.65 per share, indicating a 10.61% growth from the previous year [5] Apple (AAPL) Analysis - Apple reported strong third-quarter fiscal 2025 results with revenues of $94 billion, a 10% year-over-year increase, driven by iPhone 16 upgrades and record services revenue of $27.4 billion [6] - The company generated $27.9 billion in operating cash flow and returned $27 billion to shareholders, maintaining a strong balance sheet with $133 billion in cash and marketable securities [7] - Despite strong performance, Apple faces decelerating growth projections and $1.1 billion in tariff costs, which may pressure margins [10] - The Zacks Consensus Estimate for Apple's fourth-quarter fiscal 2025 earnings has decreased by 1.1% to $1.74 per share, indicating 6.1% growth from the previous year [11] Valuation & Performance Comparison - Microsoft and Apple trade at premium valuations with trailing P/E ratios of approximately 37.95 and 36.19 respectively, but Microsoft's premium is seen as more justified due to superior growth fundamentals and clearer AI monetization pathways [12] - Year-to-date performance shows Microsoft stock advanced 23.9%, while Apple stock returned only 3.1% [16] Conclusion - Microsoft is viewed as a more compelling investment opportunity for growth-oriented investors, particularly in AI and cloud computing, while Apple faces challenges in growth and AI monetization [18]