Which is better to invest in Apple or Microsoft?
The analyst consensus growth rate over the next five years for Apple is 11% per year, the lowest five-year growth rate of any Magnificent Seven stock. Compare that to Microsoft's consensus growth rate of 16.3% and it's clear which company is better positioned to grow in the near to mid term.
Microsoft surpasses Apple to become the world's most valuable company as the iPhone maker hits a patch of 'nothing special' | Fortune.
Despite recent headwinds, Apple remains a leader in tech with dominating brand power and immense financial resources. A recent stock dip could be the perfect time to make a long-term investment in its business and profit from its potential over the next decade.
Microsoft's growth is accelerating thanks to the company's initiative of integrating AI across multiple products. An acceleration in Microsoft's growth, multibillion-dollar revenue opportunities, and the company's valuation indicate that its stock market rally is sustainable.
Microsoft has the best dividend yield: $0.75 per share each quarter, which translates to an annual yield of 0.74%. Holding Apple stock will yield 0.49% annually, whereas Nvidia stock yields 0.03%.
Why Did Microsoft Beat Apple? The answer to this question lies in a combination of factors. Primarily, it's tied to differing market expectations for the companies. On one hand, the market is more positive about Microsoft's future, especially considering its artificial intelligence (AI) and cloud computing divisions.
Apple's business model is based on innovation and consumer-centric devices. They are able to keep their base due to easy-to-use designs and data migration to new product lines. Microsoft built its success on the licensing of software such as Windows and Office Suite.
Apple shares have made for a fantastic investment over the years, climbing 817% in the last decade. And more recently, they rose 48% in 2023, beating the Nasdaq Composite.
These assets should allow it to recover its growth momentum, along with help from its push deeper into the services niche. But does that mean Apple is a good buy for 2024 and beyond? The short answer is yes, but with some caveats.
Of the 38 recommendations that derive the current ABR, 34 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 89.5% and 7.9% of all recommendations. While the ABR calls for buying Microsoft, it may not be wise to make an investment decision solely based on this information.
Why should people invest in Microsoft?
Significant cash reserves have helped Microsoft successfully venture into cloud computing, video games, artificial intelligence (AI), consumer products, and more. The company is active in a diverse range of high-growth markets, making it one of the most attractive investment options right now.
MSFT boasts an average earnings surprise of 8.8%. Earnings for Microsoft are forecasted to see growth of 18.6% for the current fiscal year as well. Because stock prices react to revisions, buying stocks with rising earnings estimates can be very profitable.
17 analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.49 to $11.63. MSFT also boasts an average earnings surprise of 8.8%. Moreover, analysts are expecting MSFT's earnings to grow 18.6% for the current fiscal year.
Apple's payout ratio of just 16% is extremely low. This is likely because the company has preferred to spend far more of its capital-return program on stock buybacks. Though Microsoft also buys back its stock, the company has recently been opting to spend more on its dividend than on repurchases.
Yes, AAPL's past year earnings per share was $6.43, and their annual dividend per share is $0.96. AAPL's dividend payout ratio is 14.89% ($0.96/$6.43) which is sustainable.
Dividend Data
AAPL 's annual dividend is $0.96 per share. This is the total amount of dividends paid out to shareholders in a year. Apple Inc.'s ( AAPL ) ex-dividend date is February 9, 2024 , which means that buyers purchasing shares on or after that date will not be eligible to receive the next dividend payment.
Both Microsoft and Apple have been trading places for the most valuable public company for years now. Microsoft surpassed Apple's market cap in 2021, 2020, and 2018 before Apple once again regained its place at the top.
This chart shows Apple's free cash flow is considerably higher than some of the top names in tech. Apple's free cash flow actually increased 10% in 2023 despite hits to its revenue, allowing it to continue investing in its business.
| Market cap (USD) | Apple | Microsoft |
|---|---|---|
| 2021 | $2.901 T | $2.522 T |
| 2020 | $2.255 T | $1.681 T |
| 2019 | $1.287 T | $1.200 T |
| 2018 | $746.07 B | $780.36 B |
Moreover, computers running on Windows have a greater degree of customization than Apple's. You can more easily change a PC's internal components, such as CPU, GPU, and storage, than with a Mac computer. Since Windows runs on more devices, you are free to select a device that suits your budget.
What if you invested $1,000 in Apple 20 years ago?
What does that look like on a brokerage statement? Check out the above chart and you'll see that if you invested $1,000 in Apple stock 20 years ago, it would today be worth almost $530,000. The same $1,000 invested in the S&P 500 would have theoretically turned into $6,186 over the same period.
| Year | Median Price Prediction | Potential Low |
|---|---|---|
| 2024 | $216 | $183 |
| 2025 | $237 | $199 |
| 2026 | $298 | $271 |
| 2030 | $561 | $460 |
Apple stock is a "top pick" for 2024 and has potential upside of 36% as it gears up for the launch of an AI-enabled iPhone, according to Bank of America.
According to analysts, it was projected that Apple's share price could reach $220 by the end of 2023, $250 in 2024. Apple long term stock forecast is anticipated to be $315 in 2025, $370 in 2026, $425 in 2027, $465 in 2028, and $480 in 2029. In 2030, analysts anticipate Apple shares will be worth $510.
Apple stock price stood at $166.90
According to the latest long-term forecast, Apple price will hit $200 by the middle of 2025 and then $300 by the end of 2027. Apple will rise to $350 within the year of 2029, $400 in 2030, $450 in 2033 and $500 in 2035.
