Microsoft And Apple: Buy on the Dip?

Microsoft And Apple: Buy on the Dip?

Posted On April 21, 2021 1:14 pm

Bill Gates founded Microsoft (MSFT) and Steve Jobs Apple (AAPL). Bill Gates is now involved in his foundation and other pursuits leaving the company in the capable hands of CEO Satya Nadella. Tim Cook, Job’s handpicked successor, took over at Apple after his untimely death.

Microsoft and Apple are two of the most successful companies in the US and worldwide. They share a combined market cap of over $4 trillion, with APPL a couple of hundred billion ahead of MSFT.

Gates and Jobs created the two most successful companies in history. When it comes to growth in the technology sector, there have been few investment choices better than MSFT and AAPL.

Picking between the two at the current valuations is no easy task. Analysts continue to debate which company will outperform the other. I view any such controversy as a waste of time as both have unique franchises that will continue to power the shares and market caps higher over the coming years.

Analysts love to hear the sounds of their voices. Forget the debate as both MSFT and APPL offer value on any dip as their market caps are likely heading much higher in the inflationary environment. A trillion here a trillion there, the numbers reflect the decline in money’s value. Still, the companies’ stocks continue to keep pace with the economic condition that weighs on fiat currencies purchasing power.

MSFT and AAPL have established their markets by making products that have become essentials.

Traders debate which if MSFT or AAPL offers better long-term prospects

Two traders recently faced off on CNBC about the prospects for the top two S&P 500 stocks, MSFT and APPL. Gina Sanchez, the CEO of Chantico Global and chief market strategist at Lido Advisors, believes Microsoft is trading at a lower valuation and smaller premium than Apple. While JC O’Hara, chief market strategist at MKM Partners, agrees, he believes Apple will outperform Microsoft and follow MSFT rising to a new record high soon.

Meanwhile, Microsoft rose to a new record high at $261.00 on April 16, and Apple remained below its record peak at $145.09 from January 25.

The two technology leaders on either side of $2 billion market caps

As of the end of last week, Apple had the largest market cap. At $134.16 its valuation stood at $2.258 trillion.  At $260.74 at the end of last week, MSFT was worth $1.957 trillion. Microsoft is the world’s leading software company.

Microsoft recently did a deal to sell 120,000 augmented reality headsets to the US military for $21.9 billion over ten years. The system will allow soldiers to share information and decision-making, providing a safer and more effective operating environment. The contract was a homerun for MSFT, lifting its shares to new record heights.

Meanwhile, Apple is working on Smart-Home products to increase its suite of offerings.  The sheer size of the two companies and their respective cash hordes have put them in the crosshairs of regulators, politicians, and critics over anti-trust issues. Those factors will continue to trail AAPL and MSFT as their market caps grow.

$3 trillion on the horizon for both for three reasons- Keeping up with inflation and passing along tax hikes to consumers

AAPL’s shares more than doubled since the March 2020 low at $53.15. At the $134.16 level, they are roughly 152.4% higher in only thirteen months.  MSFT’s shares and market cap are approaching a 100% rise. In March 2020, the shares bottomed at $132.52. At $260.74, they were over 96.8% higher.

In August 2018, APPL was the first company to…

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