Microsoft vs Apple Stock: Which is Best?

Microsoft vs Apple Stock: When it comes to the most well-known stocks in the world, Microsoft [NASDAQ: MSFT] and Apple [NASDAQ: AAPL] definitely rank up there.

People everywhere know their brands and use their products. They are often included in lists of Blue-Chip Stocks – aka stocks of the highest value and strongest outlook for continued success.

Investors often like to invest in well-known companies like these, hoping to limit their downside. However, in the world of investments, there is always risk and a company’s stock is only worth what someone is willing to pay for it at the time.

You’ve read the headlines. Sometimes very good firm see their share prices fall because of investor sentiment and companies that have never turned a profit see a meteoric rise. That is the nature of investing. If you want to get ahead of the curve, you need to do your research so you can understand what factors may impact the stock in question –Microsoft and Apple are no exception.

Apple vs Microsoft Stock: Pros and Cons

When you invest in a blue-chip stock like Apple or Microsoft, you are getting a relatively stable performer – companies in this category are known for it. While they may crash from time to time, it doesn’t happen very often and when it does, the shares often rebound.

Blue chips also offer strong performance and less risk. These stocks drive indexes and push stock averages, they are well-managed and tend to have a large market share – but that’s also somewhat of a downside.

Volatility is a proxy for risk and risk equals a higher potential for a reward. Blue chip stocks are great, but don’t expect them to pop off and deliver a large return in a short time. It won’t happen. They are stable, remember? They may see a small bump when investor sentiment is strong or a new product is released, but the share price corrects quickly.

If anything, your bigger risk is that their stock price will decline anytime there is bad news about the company, its industry, or the economy ­– blue chips like Microsoft and Apple are big enough that the market expects economic trends to impact company performance directly.

That said, as long as you realize price fluctuations will happen in the face of company announcements and the like, you can use that trend to your advantage, opening or growing a position when the price is depressed or selling when momentum and sentiment is up.

Is Microsoft Stock a Buy?

Microsoft is a very diverse company. It may surprise you to know all the areas in which the company operates. Microsoft has a range of productivity products, including Office 365, Skype, Outlook, and LinkedIn.

The company also has cloud services and server products, like Microsoft Azure and GitHub.

The rest of Microsoft’s efforts are centered on personal computing. This includes its Windows operating system as well as Microsoft Surface devices and gaming products, like Xbox.

One of the elements that make Microsoft unique is that its products are not in an ecosystem. While Windows is a popular operating system, people who use Apple or Google Chromebooks can still use Microsoft Office, LinkedIn, or Skype so the requirements for adoption and the barriers to entry are extremely low. It also has buy-in from a large community – many people use Microsoft Office products.

Moving forward, Microsoft wants to push each of these offerings – business productivity, intelligent cloud, and personal computing.

It expects to do this through modular business applications that improve how people connect and leveraging AI technologies to develop products and services that have an intelligent edge to the ways they work.

Should You Invest in Apple Stock?

Apple is the company that makes MacBook, iPhone, Apple Watch, and iPad amongst others. It has digital content like Apple Music and Apple TV as well as cloud storage (iCloud), Apple Arcade (a games subscription), Apple Card (a credit card), Apple Pay (a mobile payment solution), and Apple News (a news subscription). It sells its products directly as well as through third parties – the split is around 30:70.

Competition in its industry is fierce. New products come out all the time and many of them are priced less than Apple products while offering many of the same specs.

Some of these competitors may go so far as to sell their products at cost in order to attract customers away from Apple. To compete, Apple has a two-prong approach.

On the one hand, the company makes an effort to produce high quality products. The materials it chooses in its fabrication to the structures that power the devices, unique arrangements with content producers to an aesthetic that is always on-trend, Apple makes a mark this way.

On the other hand, the company also offers its products as part of an ecosystem. Each product ties into a centralized experience. Users can easily transfer between devices as needed, pushing documents and other content from desktop to laptop to tablet to phone or carrying over a media experience from phone to tablet to laptop to Apple TV.

In either case, people seem to like it. According to CNBC, 64% of people in the US own at least one Apple product and the average household has at least 2.6 Apple products. That figure increases drastically amongst people with incomes over $100,000. Around 87% of high earners own at least one Apple device and the average high-income household has 4.7 Apple products under its roof.

Microsoft Vs Apple Stock: The Bottom Line

Microsoft and Apple are both blue chip stocks. Their earnings are stable, they have solid management in place, and they are less volatile than other companies.

They are also both tech companies that sell physical products as well as software and software subscriptions that are popular around the world. Either company could make a good investment.

Which one is best depends on you: Are you Mac or PC?

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.