Battle of the $2T giants: is Apple or Microsoft the better stock to buy

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 24, 2021
  • Microsoft Corp becomes the world's second $2 trillion company.
  • Traders choose between AAPL and MSFT on CNBC's "Trading Nation".
  • Apple Inc is currently about 8% down compared to its record high.

Microsoft Corp (NASDAQ: MSFT) joined rival Apple Inc (NASDAQ: AAPL) in the $2 trillion club earlier this week, fuelling the debate on which of the two stocks is more attractive for investors at the moment.

Quint Tatro’s comments on CNBC’s “Trading Nation”

It’s a hard pick for sure. While the President of Joule Financial, Quint Tatro, also agrees, he sees one of the two more suitable for investment and the other for trade. On CNBC’s “Trading Nation”, Tatro said:

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“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.”

Currently exchanging hands at 32 times forward earnings, Microsoft is likely to disclose an annualised growth of 16% in full-year sales. Its per-share profit for the year to June is expected to come in at $7.77 versus last year’s $5.76.

“I think the trade here is Apple. Apple is still a little bit off highs, and again, it’s trading at a fairly high multiple, it’s pretty rich, but doesn’t have as good a balance sheet – but I think the trade here is Apple to new highs.”

Apple and Netflix are the only two FAANG stocks at the moment that haven’t printed a new high since January. Compared to its record, AAPL is currently about 8% down.

MKM’s O’Hara sees more potential in Apple

During the same interview with CNBC, MKM Partners’ J.C. O’Hara also expressed confidence that MSFT was likely to remain resilient in the upcoming months after hitting a record high on Wednesday. Quoting the rising 200-day MA and the broader technical setup, O’Hara said that “the short-term momentum favoured Microsoft.”

On the other hand, the MKM expert said that after the pullback in Apple Inc, the stock might be set to outperform the technology sector as well as the broader market.

“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. Look at some of its peers — Facebook breaking out, Microsoft breaking out, Google 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.”

Apple is down about 1% on the intraday chart.

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