Microsoft vs. Google: Which Tech Stock Is the Better Buy for Investors?
Written by
Dawn Allcot
Edited by
Jana Lynch
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For years, the mega-cap tech stocks have dominated the S&P 500, with Facebook, Amazon, Apple, Netflix, and Google making up roughly 15% of the S&P 500 and 30% of the tech-heavy Nasdaq index, according to the Groww blog.
However, in recent years, company name changes and the growth of Microsoft have led to a new collection of tech stocks: MAMAA. The acronym stands for Microsoft, Apple, Meta (formerly Facebook), Amazon and Alphabet (formerly Google). With a combined market cap of $10 trillion, these five stocks make up 22% of the S&P 500 and have significantly outperformed the index over the past decade.
If you have some extra cash right now, perhaps from a tax refund, you might be looking to invest in one of these stocks. You can’t go wrong with any of the MAMAA stocks for long-term gains. But which is the better buy right now for investors: Microsoft or Google?
The Case for Investing in Microsoft Stock
Microsoft (MS) recently jumped ahead of Apple as the world’s most valuable company based on market cap, bolstered by the acquisition of Activision Blizzard in Q4 2023. Earnings rose 33% year-over-year in the most recent report.
Microsoft’s cloud computing segment, with Azure at the forefront, rose 20% year-over-year. However, if you’re looking at MS with an eye on AI, Bing Chat didn’t perform as expected and the company’s search and news revenue from advertising only got an 8% lift.
AI Copilot, integrated into the Office 365 suite and other MS products, puts MS in the driver’s seat when it comes to AI advances compared to Google.
Overall, Microsoft stock has grown 47% in the past 12 months.
The Case for Investing in Google Stock
Google, or Alphabet, stock has gained more than 40% in the past year, putting it on par with Microsoft. The company’s ad revenue only increased by 11% last year, falling short of expectations by $65.5 billion, according to TipRanks.com. The company rebranded its Bard Chatbot to Google Gemini in early 2024, but OpenAI’s ChatGPT, which Microsoft invested in, continues to dominate that market.
Additionally, Google Cloud continues to grow with 26% revenue growth year-over-year.
Final Note
Looking at the numbers, investing in either tech giant would be a wise move. TipRanks.com gives both Alphabet and Microsoft “Strong Buy” ratings. Microsoft has an upside potential of 11%, compared to an 8.4% upside potential for Alphabet.
TipRanks.com recommended either stock as a long-term investment, but if you’re looking for near-term gains, Microsoft wins thanks to broad-based revenue growth, according to the experts.
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