Apple posts $94B revenue with iPhone sales up 13% and record services growth.
Microsoft leads in AI and cloud with Azure revenue up 39% and $30B data center push.
Valuation favors Microsoft, appearing 22% undervalued vs Apple’s 21% overvalued.
Apple and Microsoft remain two of the biggest names in technology and the stock market. Both companies have built dominant positions in their industries and continue to shape the future of global innovation. Investors often compare the two to decide which stock might offer better opportunities. Recent financial results, stock valuations, and new investments in artificial intelligence provide a fresh perspective on their current positions.
Apple stock is trading around $226.01 with a market capitalization of more than $3 trillion. The company has a price-to-earnings (P/E) ratio of 30.3, supported by earnings per share (EPS) of 6.59.
Apple’s third-quarter 2025 earnings showed revenue of $94 billion, far above the expected $89.3 billion. iPhone sales were particularly strong, rising 13%, and Apple’s services segment brought in a record $27.42 billion. These results highlight the continued power of Apple’s ecosystem, which includes not just devices but also a wide range of services such as iCloud, Apple Music, and the App Store.
The iPhone remains Apple’s most important product, but services have grown into a vital cash-generating stream. Services are attractive because they produce steady revenue and higher profit margins compared to hardware sales. Apple is also making heavy investments in the United States, committing more than $500 billion over four years into research and development, manufacturing, and job creation.
However, Apple has faced criticism for being slower than rivals in artificial intelligence. While the company is making investments and has shown interest in AI firms like Perplexity AI, major product upgrades are not expected until 2026. This delay could put pressure on Apple as competitors race ahead in AI.
Also Read - Is it a Good Time to Buy or Sell Apple Stock Now?
Microsoft stock is trading near $505.72 with a market capitalization of about $2.79 trillion. Its P/E ratio stands at 28.9, with earnings per share of 12.93.
The company’s most recent results were very strong. In the fourth quarter of its fiscal year, Microsoft reported revenue of $76.4 billion, an increase of 18% year-over-year. This beat analyst expectations of $73.8 billion. Earnings per share came in at $3.65, also higher than forecasts.
Microsoft’s cloud platform, Azure, continues to be a major driver of growth. Azure revenue grew 39%, much faster than Amazon Web Services, which grew 17.5%. Microsoft has also benefited from its focus on artificial intelligence. GitHub Copilot, an AI coding assistant, now has more than 15 million users, and the company is expanding AI features across products like Microsoft Office and Windows.
To support its AI expansion, Microsoft plans to invest $30 billion in new data centers in 2025. This aggressive approach positions the company as a leader in the AI race. Historical returns also support Microsoft’s strength: a $1,000 investment made 20 years ago would now be worth almost $28,000, showing the company’s ability to deliver consistent long-term value.
When comparing valuations, Apple and Microsoft trade in a similar range relative to their histories. Apple’s score sits around 49, while Microsoft’s is about 46, suggesting that both are moderately priced compared to past levels.
Morningstar’s analysis, however, shows a clearer difference. Microsoft is estimated to be about 22% undervalued, while Apple appears 21% overvalued. This suggests that Microsoft may currently offer more upside potential based on valuation.
Despite strong fundamentals, both stocks face risks. Investors are paying close attention to whether artificial intelligence growth may be forming a bubble. Both Apple and Microsoft are part of the so-called “Magnificent Seven” stocks, which have seen large gains that may not be sustainable if economic conditions change.
Microsoft’s biggest advantage right now is its leadership in artificial intelligence and cloud computing. The partnership with OpenAI has given Microsoft a clear edge in the AI space, with products like Copilot reaching more than 100 million monthly users. This broad adoption strengthens Microsoft’s position in both the consumer and enterprise markets.
Apple, on the other hand, continues to focus on the strength of its ecosystem. The combination of hardware, software, and services creates loyalty that is hard for competitors to match. The company’s massive US investments show a commitment to long-term growth and domestic production. However, delays in AI product development mean that Apple may struggle to compete directly with Microsoft in this area over the next year or two.
Large investors continue to see value in both companies. Shell Asset Management, for example, increased holdings in both Apple and Microsoft during the second quarter of 2025. Microsoft’s stock gained 18% in the first half of the year and another 3.3% in the third quarter. Apple also recovered gains after earlier challenges, including leadership changes and the loss of some key AI talent.
Still, the market is not without concerns. Analysts warn that if AI growth slows, valuations across the largest tech stocks could fall sharply. Both Apple and Microsoft would be affected, though Microsoft’s stronger AI leadership may help it weather such risks better.
Looking at the last five years, Apple has outperformed Microsoft in stock returns. Apple’s stock gained about 198.8%, while Microsoft rose 145.2%. This shows that Apple has delivered stronger medium-term results for investors, even though Microsoft now appears to have the valuation advantage.
Also Read - Is it a Good Time to Buy Microsoft Stock?
Both Apple and Microsoft remain exceptional companies with powerful positions in global technology. Apple stands out for its steady cash flows, strong brand, and unmatched product ecosystem. It continues to generate reliable revenue through iPhone sales and growing services, while committing huge sums to US research and development.
Microsoft, however, is leading the charge in artificial intelligence and cloud services. With Azure growing rapidly, major AI investments underway, and a more attractive valuation, Microsoft looks better positioned for long-term growth.
For investors focused on stability and brand-driven resilience, Apple may be the more comfortable choice. But for those seeking stronger growth potential, particularly in artificial intelligence and cloud computing, Microsoft currently appears to be the better buy.
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