Apple Vs Microsoft: Which is the Best Tech Investment as Quarterly Results Approach?

Markets will receive quarterly reports from two of the top software and hardware companies this week resptively, with Microsoft MSFT set to release results for its fiscal second quarter on Wednesday, January 28, and Apple AAPL reporting results for its fiscal first quarter on Thursday, January 29.Microsoft’s standout software successes are overwhelmingly in cloud infrastructure and AI-optimized services with respect to its Azure Cloud Platform, enterprise support services, and Microsoft 365 office apps (Word, Excel, PowerPoint).Meanwhile, Apple’s biggest wins have come from its custom AI-powered silicon chips (M-Series), which are powering new product lines for its MacBook computers, iPads, iPhones, and other emerging AI-centric hardware devices.  That said, let’s see which Mag 7 tech giant may be the better investment as their quarterly results approach. Microsoft’s Q2 ExpectationsBased on Zacks estimates, sales for Microsoft’s fiscal second quarter are expected to be up 15% to $80.23 billion. On the bottom line, Q2 EPS is slated to spike 20% to $3.88. Notably, Microsoft has surpassed the Zacks EPS Consensus for 13 consecutive quarters, posting an average EPS surprise of 8.53% over its last four quarterly reports.Image Source: Zacks Investment Research Apple’s Q1 ExpectationsAs for Apple, sales for its fiscal first quarter are thought to be up 10% to $137.47 billion, with Q2 EPS expected to rise 10% as well to $2.65. Apple has surpassed the Zacks EPS Consensus for 11 straight quarters with an average EPS surprise of 5.42% over its last four quarterly reports.Image Source: Zacks Investment Research Tracking Microsoft & Apple’s OutlookZacks estimates now call for Microsoft’s FY26 sales to increase 13% to $325.06 billion compared to $281.72 billion last year. Plus, FY27 sales are projected to rise another 14% to $371.89 billion. Microsoft’s annual earnings are forecasted to rise 14% this year to $15.62 per share from EPS of $13.64 in 2025. More intriguing, FY27 EPS is projected to spike another 17% to $18.26.Image Source: Zacks Investment ResearchPivoting to Apple, total sales are expected to rise a respectable 8% to $451.64 billion compared to $416.16 billion in FY25. Apple’s very robust top line is projected to stretch another 8% in FY27 to $487.28 billion. Annual earnings are forecasted to be up 9% to $8.17 per share from EPS of $7.46 last year. Furthermore, Apple's FY27 EPS is projected to increase another 12% to $9.12.Image Source: Zacks Investment Research Recent Performance & Valuation ComparisonOver the last year, Apple's stock is up +11% to slightly outperform Microsoft’s +9%, although both have lagged the broader index's returns of more than +15%.In the last three years, MSFT and AAPL have edged the S&P 500 but have trailed the Nasdaq’s gains of more than +100%, with Microsoft’s +90% edging Apple’s return of nearly +80%.Image Source: Zacks Investment ResearchIronically, at their current levels, both stocks trade at roughly 30X forward earnings, with Microsoft shares trading at around $470 and Apple stock at around $250. Microsoft has a slightly more attractive PEG ratio of 1.7X when comparing the P/E ratio to their long-term growth rate consensus, with Apple at 2.2X.In terms of price-to-forward-sales, Apple stock trades at a more reasonable 8X versus Microsoft’s 11X. Still, Microsoft’s more attractive top line trajectory makes up for the slight P/S premium.Image Source: Zacks Investment Research Bottom LineAhead of their quarterly reports, Microsoft stock sports a Zacks Rank #2 (Buy), with Apple shares landing a Zacks Rank #3 (Hold) at the moment. More short-term upside may favor MSFT, especially if the software giant can meet its lofty quarterly expectations. Apple, on the other hand, isn’t receiving quite the AI growth-related boost that has compelled investors, but AAPL may certainly be worth holding in the portfolio as the hardware leader continues to propel its devices with more advanced chips.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks