Apple vs. Microsoft: What’s the Better “Magnificent Seven” Stock to Buy in 2026?
April 21, 2026
Two of the most iconic stocks in the “Magnificent Seven” are Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL). They have been rivals for decades, and both have large and profitable operations. Apple is the larger of the two today, with a market cap of $4 trillion versus $3.1 trillion for Microsoft.
Microsoft is a giant in the business world, known for its popular Windows operating system and Office products. Apple, meanwhile, has a devoted following of users and is often seen as a luxury brand.
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Over the past decade, Apple has been the far better buy with returns totaling 920%, compared with approximately 650% for Microsoft. Going with either one, however, would have been a far better move than tracking the S&P 500, which has risen by roughly 240% over that time frame. But which of these tech stocks is the better buy today?
Microsoft’s business is incredibly diverse, with the company generating double-digit growth in its most recent quarter across multiple segments, including Microsoft 365, LinkedIn, Azure, and Microsoft Cloud. It also has opportunities for growth in other areas, which haven’t fared so well lately, including Xbox and device sales.
The business is extremely broad and diverse, making it easy for the company to continually find opportunities to grow its top and bottom lines, and Microsoft has done just that over the years. In its most recent fiscal year, which ended on June 30, 2025, the company’s sales totaled $282 billion and net income was $102 billion, for a terrific profit margin of 36%. Three years earlier, its revenue was $198 billion and net income was $73 billion, translating into around 40% growth in both sales and profits since then. The company has also been investing heavily in artificial intelligence (AI) and has opportunities for even more growth in both the short term and long term.
Microsoft’s stock has been off to a poor start for 2026, declining around 14% thus far, as investors have been bearish on software stocks as a whole, largely due to AI. However, that simply makes it a more enticing stock to own these days, as buying it on weakness can lead to stronger returns in the long run.
Apple has built up a strong ecosystem of related products and services that can generate a lot of revenue from its customers. Consumers who buy their popular iPhones might also buy Mac computers, iPads, and connect those devices to wearables and home devices. Then, they might also subscribe to services like Apple Music or Apple TV+.
The beauty of its business is that the iPhone effectively serves as a gateway to other opportunities. Once a person is in the Apple ecosystem, there’s an incentive to stay within it to ensure everything integrates and syncs correctly.
Apple’s strong brand loyalty is virtually unmatched, as the company has been lagging behind in AI and innovation as a whole, yet that hasn’t dissuaded its loyal customers. The company generated an incredible $416 billion in net sales in its most recent fiscal year, which ended Sept. 27, 2025. Its profit totaled $112 billion and was 27% of its top line.
The stock’s returns have been flat this year, but in the past five years, it has doubled in value. It has continually shown that it can be a solid buy-and-hold investment for safety. This is a company billionaire Warren Buffett once referred to as, “probably the best business I know in the world.”
It’s hard to go wrong with either one of these fantastic companies. They’re both highly profitable and have many tremendous products and services. And while their strategies for AI differ, they can both generate more growth from it in the future.
But if I were buying one of these stocks today, it would be Microsoft. The stock has dipped fairly low this year and is a more attractive buy. Apple has a solid business, but I don’t think it warrants paying 35 times earnings for it, given that its growth hasn’t been all that impressive over the years. Microsoft, meanwhile, trades at just 26 times earnings. Apple may be stable and safe, but I’d argue it doesn’t make much of a compelling growth stock, especially at its high valuation. Given all the factors, Microsoft is the stock I’d go with today.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool has a disclosure policy.
Apple vs. Microsoft: What’s the Better “Magnificent Seven” Stock to Buy in 2026? was originally published by The Motley Fool
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