Microsoft Edges Out Apple as Better Long-Term Bet Amid AI Infrastructure Push

Apple and Microsoft have posted impressive financial results in their latest quarters, but their growth drivers are pulling in opposite directions. Apple's June quarter delivered revenue of $109.42 billion, up 16.36% year-over-year, with iPhone sales contributing $54.25 billion to the total.

However, Tim Cook flagged an unusual problem: demand is outrunning supply due to a 'demand forecast issue', rather than a broken supply chain. Services revenue reached $30.74 billion, while gross margin received a 2 percentage point boost from tariff refunds.

Micrsoft's fiscal Q4 revenue landed at $90.01 billion, up 17.75%, with Azure growing 43%. The key metric is the company's commercial remaining performance obligation (RPO) of $678 billion, up 84%, representing contracted future revenue already under signed customer commitments.

Microsoft's focus on AI infrastructure through large CapEx investments contrasts sharply with Apple's buybacks and dividend payouts. While Apple returned around $33 billion to shareholders in the quarter and repurchased $62.09 billion of stock over nine months, Microsoft spent $115.95 billion on CapEx in fiscal 2026 to build its AI platform.

The valuation gap between Apple (P/E: 35) and Microsoft (P/E: 27) is significant, with the latter's P/E reflecting the divergence in their business strategies. While Apple's story revolves around on-device Siri AI plus private cloud compute, framed around privacy, Microsoft's focus on enterprise AI spending through its Copilot seats and contracted backlog.