Is Apple Or Microsoft The Better Buy Right Now?

As the S&P 500 hit a new record closing high for the second straight day on Thursday, CNBC’s “Trading Nation” asked two traders which of the two largest S&P 500 stocks is the better buy: Microsoft Corp. MSFT or Apple Inc. AAPL?

What Happened: Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, said the answer depended on whether investors value the reopening trade and catch-up or whether they valued long-term growth.

Sanchez noted that if the reopening trade is valued, Apple got hit the hardest last year as people chose not to upgrade their phones or computers. However, the expectations for 2021 as well as 2022 are very strong and the catch-up trade in Apple is very good.

Microsoft, on the other hand, has a very long track record of growth and the expectations are even brighter after the pandemic than before the pandemic, according to Sanchez. During the pandemic, the company continued with the build-out of their Azure Suite and Stack.

See also: How To Buy Apple Stock

Based on just pure valuation, Microsoft is actually not trading at as high a premium as Apple is, according to Sanchez. Even though Apple is absolutely cheaper, Microsoft is actually cheaper relative to its own history, she said.

JC O’Hara, chief market technician at MKM Partners, said that Microsoft is clearly the stronger chart and its stock has already broken out above its February highs to reach all-time highs.

However, he feels that Apple could be the best trade to buy right now as the trade he is looking at is a catch-up trade. He predicted that Apple is going to run up to test its February highs.  

O’Hara said that just as Microsoft last week began to break out to new highs, Apple will also do likewise soon.

See Also: 3 FAANG Stock Laggards Look For A Return To Highs

Why It Matters: Shares of Microsoft hit a record high for the second straight day on Thursday, while Apple has not reached a new high since touching a new 52-week high on January 25 and has even fallen 10% since then.

Apple has a market capitalization of $2.18 trillion, while Microsoft has a market capitalization of $1.91 trillion. Apple’s year-to-date returns are negative 3.5%, while Microsoft has returned year-to-date gains of 12.6%.

Price Action: Apple shares closed 1.9% higher on Thursday at $130.36 and further rose almost 0.4% in the after-hours session. Microsoft shares closed 1.3% higher on Thursday at $253.25 and further rose almost 0.3% in the after-hours session.

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