Apple vs. Microsoft: Which Stock Should Canadian Investors Buy Today?

Tech stocks such as Apple and Microsoft continue to grow at an enviable pace and should be part of your portfolio right now.

| More on:
calculate and analyze stock

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite their multi-trillion-dollar valuations, tech heavyweights Apple and Microsoft continue to outpace the broader indices on a consistent basis. In the last five years, the S&P 500 has returned 144% to shareholders, while shares of Apple and Microsoft are up by 485% and 510%, respectively. In the last 10 years, AAPL and MSFT gained 1,460% and 1,130%, respectively, compared to the S&P 500’s returns of 347%.

Both the tech companies remain well poised to deliver double-digit gains annually going forward. But let’s see which stock between AAPL and MSFT should be part of your portfolio right now.

The bull case for Microsoft

In the fiscal first quarter of 2022 that ended in September, Microsoft reported revenue of US$45.3 billion, which was an increase of 22% year over year. Its GAAP profits rose by 49% to US$20.5 billion. The company’s cost of sales, slower growth in operating expenses, and a tax benefit of US$3.3 billion contributed to robust growth in earnings. Microsoft’s stellar results allowed it to increase free cash flow by 30% to US$18.7 billion in Q1.

MSFT’s market-thumping returns in the last decade have meant the stock is valued at a forward price-to-earnings multiple of 37, which is significantly higher than the ratio of 15 in 2014, just before Satya Nadella was appointed as its CEO.

But the company is part of several rapidly expanding markets. For example, a report from Grand View Research expects the cloud computing market to grow at an annual rate of 19% through 2028. In Q1, Microsoft’s cloud business saw sales increase by 31% year over year to US$17 billion. It is also the second-largest company in this space with a share of 19%.

With a cash balance of US$130.6 billion and US$53.3 billion in debt, Microsoft has enough flexibility to invest in new product development, acquire high-growth companies, repay debt, or even increase dividend payments.

The bull case for Apple

While the iPhone generates a majority of the company’s sales, Apple has successfully expanded its suite of products and solutions over the years. Its Services segment is a high-margin business that offers subscription solutions such as Apple Music, Apple Arcade, Apple TV+, and Apple Care, among others.

Apple is a major player in the smartphone, tablet, and desktop verticals and has rapidly gained traction in the wearable segment as well with the introduction of devices such as the Air Pod and Apple Watch.

In its fourth quarter of fiscal 2021 that ended in September, Apple’s sales rose by 29% year over year to US$83.4 billion, which was below analyst forecast of US$85 billion. The company’s adjusted earnings also rose by a stellar 70% to US$1.24 per share.

Apple explained that its top line was impacted by US$6 billion in Q4 due to supply-chain disruptions, and these headwinds are likely to continue in the near term.

The Foolish takeaway

Microsoft and Apple are among the most popular brands in the world. The two companies enjoy a wide economic moat and have successfully created an ecosystem that aims to enhance customer engagement. It’s impossible to choose between the two blue-chip titans of the technology space; investors would be advised to add both stocks to their portfolios right now.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Apple wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Apple and Microsoft.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Tech Stocks

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution 

The investment environment is seeing a shift in 2025. Here is an investment strategy to consider for your $7,000 TFSA…

Read more »

An investor uses a tablet
Tech Stocks

Got $1,500? 1 Tech Stock to Buy and Hold Forever

Meta Platforms (NASDAQ:META) has been a winning bet that could continue to perform in 2025.

Read more »

money cash dividends
Tech Stocks

2 Canadian Stocks to Capitalize on Income Through 2025

Don't miss out in the resurgence of these two great stocks, with both already showing a comeback.

Read more »

Group of people network together with connected devices
Tech Stocks

The Smartest Growth Stock to Buy With $1,000 Right Now

Here's why Shopify (TSX:SHOP) remains a top growth stock long-term investors may want to consider right now.

Read more »

Data center woman holding laptop
Tech Stocks

Why CGI Stock Could Be the Best Stock to Buy Right Now

CGI has a strong long-term history of shareholder value generation, operational performance, and stock price gains.

Read more »

cloud computing
Tech Stocks

Alert: 2 High-Tech TFSA Growth Stars You Won’t Want to Miss

Shopify (TSX:SHOP) and a magnificent tech stock are worth buying for one's TFSA for the next few years.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

The Savviest U.S. Stock to Buy With $5,000 Right Now  

The AI rally is not dead, and this AI-savvy U.S. stock could prove this in 2025 with its upcoming product…

Read more »

A patient takes medicine out of a daily pill box.
Tech Stocks

The Best AI Stock to Invest $1,000 in Right Now

It's had its ups and downs, but WELL Health stock is making a comeback in a big way among AI…

Read more »