Apple vs Google stock: what’s a better buy heading into the earnings print?

on Jul 25, 2022
  • Miller Tabak's Matt Maley explains his bull case for the Google stock.
  • He also disclosed his concerns about Apple Inc on CNBC Power Lunch.
  • GOOGL is trading near its 52-week low; AAPL is up 17% from recent low.

Alphabet Inc (NASDAQ: GOOGL) is relatively a better buy than Apple Inc (NASDAQ: AAPL) ahead of earnings scheduled for this week, says Matt Maley. He’s the Chief Market Strategist at Miller Tabak.

Maley explains his bull case for Alphabet Inc

Maley prefers the Google stock primarily on valuation. The stock down nearly 30% year-to-date, he’s convinced, looks more ready for a recession.

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Alphabet sure is a bold call after what a slowdown in advertising did to Snap Inc last week. Still, Maley said on CNBC’s “Power Lunch”:

It’s the midterm election year, which is usually not a big one for ad spending. But it’ll be this year. They’ve had record fundraising this year. They won’t use TV spending, that’s gone by the wayside; they’ll move to areas like Google Search.

Alphabet Inc is expected to earn $1.14 a share this quarter that represents a 16% YoY decline. A sell-off post earnings (if any), he added, would only make the stock more attractive.

Why is he concerned about the Apple stock?

Shares of Apple Inc, on the other hand, are already up 17% from their low. At 25 times earnings, Maley says the stock is still on the expensive side compared to Google at 17 times. He added:

Today, they talked about lowering prices on some of their iPhones in China. Last week, they talked about a hiring freeze and cutting back on spending. These hints tell me they haven’t priced in any kind of a recession here.

AAPL is also trading just below a strong resistance at $158 a share. The iPhone maker is expected to report $1.16 of EPS on $82 billion in revenue this quarter. It has already warned of an up to $8.0 billion hit related to “China” and supply constraints at large.

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