Tech Giants Showdown: A Closer Look at Apple and MicrosoftTech Giants Showdown: A Closer Look at Apple and Microsoft

By: Alex Freidmen


The Battle of the Titans

The technology sector has taken the 2024 market rally by storm, fueled by the AI frenzy, hopes of rate cuts, and the dominance of the “Magnificent Seven.” Apple and Microsoft are currently in a neck-and-neck race for the title of the most valuable company, with Apple having briefly edged out Microsoft last week. As it stands, Apple boasts a market cap of $3.26 trillion, while Microsoft stands strong at $3.29 trillion.

Apple’s Strides in AI

Historically lagging behind in AI adoption, Apple has made significant strides with the launch of cutting-edge AI features at its Worldwide Developers Conference. The introduction of AI-powered capabilities is poised to breathe new life into Apple’s performance, boosting investor confidence in the iconic brand.

Microsoft’s AI Dominance

On the other hand, Microsoft, the software behemoth, reported stellar third-quarter fiscal 2024 results, surpassing both earnings and revenue expectations. The company’s strategic investments in AI, particularly in cloud services, have paid off handsomely, with a substantial portion of Azure revenue growth attributed to AI initiatives.

Comparing Apple and Microsoft

Microsoft has outpaced Apple this year, with a 17.7% gain compared to Apple’s 10.4% rise. Both companies currently sport a Zacks Rank #3 (Hold) and a Momentum Score of A. While Microsoft boasts a Growth Score of B, indicating strong growth potential, Apple presents a relatively attractive valuation trading at a lower P/E ratio than Microsoft. Apple’s revenue growth outlook also surpasses industry averages, despite slightly lagging in earnings growth.

ETFs to Consider

Investors eyeing growth opportunities may consider including both Apple and Microsoft in their portfolios. For those seeking diversified exposure to these tech giants, ETF options such as Select Sector SPDR Technology ETF (XLK), MSCI Information Technology Index ETF (FTEC), Vanguard Information Technology ETF (VGT), and iShares Dow Jones US Technology ETF (IYW) could offer a balanced approach. These ETFs hold significant positions in both Apple and Microsoft, providing investors with exposure to the robust growth potential of these industry leaders.

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