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Apple and Microsoft are the two largest companies in the S&P 500 by a wide margin. While Apple had been the undisputed king for years, Microsoft usurped it in early February 2024, claiming the crown as the stock with the largest market cap in the S&P 500. As of March 5, 2024, Microsoft comprised 7.14% of the entire S&P 500 all by itself, while Apple was close behind at 6.08%. The next nearest stock, third-place Nvidia, makes up just 4.7% of the index.
While Microsoft’s ascendance has had lots to do with its recent outperformance vs. Apple, how do the two tech giants stack up against each other over a longer time period, such as 10 years? Here’s a look at the numbers behind the names.
Apple 10-Year Performance
On March 5, 2014, Apple stock closed at a price of $16.75, adjusted for all splits. Ten years later, on March 5, 2024, Apple closed at $170.12. Patient investors who held the stock through all of its ups and downs were rewarded with what Wall Street refers to as a “10-bagger,” a stock that provided a return of 10x the original investment. On a percentage basis, those who held Apple stock over the past 10 years earned a 916% return.
Microsoft 10-Year Performance
Microsoft began the last 10 years with a stock price of $32.27, once again adjusted for all splits. With its closing price of $402.65 on March 5, 2024, it recorded an incredible gain of 1,148%. This is even more than Apple’s outsized gain of 916% and marks a more than 12x return for Microsoft investors who held the stock for the full 10 years. As impressive as Apple’s performance has been over the past decade, Microsoft’s surge helps explain why the company has at least temporarily taken away Apple’s throne atop the S&P 500 market cap leaders.
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How About Since Inception?
Apple has been a public company since Dec. 12, 1980. Its IPO price that day was $22, but after adjusting for splits over the years, the effective IPO price was just 10 cents. This gives Apple an average annual return since inception of 18.87%, compared with the S&P 500’s 10.38% annual return over the same time period. That’s a pretty impressive outperformance, particularly for a company that has been public for over 43 years.
It may be hard to believe, but Microsoft’s outperformance has been even more dramatic. The company went public on March 13, 1986, at $21 per share. On a split-adjusted basis, that IPO price was effectively $0.0729 per share. Running the numbers from there shows that Microsoft has posted an average annual return of 26.18% since its inception. Meanwhile, the S&P 500 “only” returned 10.38% per year since Microsoft’s IPO date. In other words, over the last 38 years, Microsoft has, on average, trounced the S&P 500 every year by an average factor of 2 1/2 times.
Which Stock Is the Better Buy Going Forward?
Based on recent momentum, Microsoft is the best play right now. The stock is up 8.57% YTD as of March 5, and 58.43% over the past year. Analysts have an average 12-month price target of $468.70 on the stock, with a consensus “strong buy” rating. If MSFT reaches that target, that would translate to an additional 16% gain over the next year.
Apple has been a Wall Street darling for years on end now, so it’s no surprise that even with its recent pullback analysts have a consensus “strong buy” rating on that stock as well. The average 12-month price target of $205.77 suggests a 21% gain is possible in the coming year.
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Which stock is best for you will depend on a combination of your investment objectives, risk tolerance and your opinion on how the stocks and companies are performing. For example, if you’re more of a consumer products investor, you might give the nod to Apple. If you’re more inclined to buy a more tech-oriented stock that’s on the cutting edge of AI, Microsoft might appeal to you more. The type of investor you are can also play a role. For example, if you favor stocks that have momentum, Microsoft might be your choice. But if you’re looking for a high-quality name that has sold off recently and has a higher 12-month potential gain according to analysts, Apple might be the call.
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