Microsoft just joined Apple in the $2 trillion valuation club. The question is, which stock is a better right now?
Microsoft (NASDAQ: MSFT) joined Apple (NASDAQ: AAPL) in the exclusive $2 trillion valuation club on Thursday.
The software giant closed at the milestone today after unveiling Windows 11, the first new version of its flagship operating system in more than five years.
The new version marks a significant overhaul of the Windows operating system, and will include a new “web widgets” area where content creators can highlight their products and a bundling of Microsoft’s own apps including its Teams chat and videoconferencing software directly into the operating system.
“Think about the size and scale of the Windows platform and the opportunity to open up to local content creators and global brands alike,” Microsoft Chief Product Officer Panos Panay said at the virtual unveiling event. “It’s good for creators, it’s good for consumers. We are just at the beginning of opening up new real estate within Windows.”
But with Microsoft now at the $2 trillion valuation level, the question now is, is the stock still a buy or would Apple be a better option now?
“Do I have to pick one?” asked Quint Tatro, president of Joule Financial. “From an investment standpoint, I think you’ve got to go with Microsoft. They have a much better balance sheet, they’re trading at a higher multiple, but they’re growing a little bit faster, albeit still in the high single digits.”
Still, “I think the trade here is Apple,” Tatro added. “Apple is still a little bit off highs, and again, it’s trading at a fairly high multiple, it’s pretty rick, but doesn’t have as good a balance sheet – but I think the trade her his Apple to new highs.”
Apple hasn’t hit a new high since late January, and is down about 8% since then. The stock has consolidated in a wedge over the last few months.
“If we’re in a bull market and the hallmark of this overall bull market is rotation, I believe Apple is setting up here for a nice catch-up trade,” said J.C. O’Hara, chief market technician at MKM Partners. “Look at some of its peers – Facebook (NASDAQ: FB) breaking out, Microsoft breaking out, Google (NASDAQ: GOOGL) breaking out. It’s a matter of time before Apple does break out… The catch-up trade will outpace the short-term momentum that Microsoft is seeing.”