Best Stock to Buy Now: Alphabet or Apple?

Key Points

• Apple and Alphabet both want to maintain the status quo with their businesses.

• Apple's growth has lagged Alphabet's in recent years.

• Alphabet's stock trades at a discount to Apple's.

• 10 stocks we like better than Alphabet ›

Two of the world's largest companies are Apple (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). These two companies are currently the third and fourth largest in the world by market cap, so neither is likely to provide market-crushing returns. As a result, investors need to determine if either of them can outperform the market over the long term; otherwise, they aren't worth owning.

I believe there is a clear better buy between the two right now, and this stock could easily outperform the market over the next five years, while the other may struggle to do so. Which one is it? The answer may surprise you.

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Image source: Getty Images.

Both businesses want to maintain the status quo

Both Apple and Alphabet have some of the most recognizable brands on the planet. Apple's ecosystem is centered around the iPhone, with accessories and laptops to create a leading consumer technology brand. Alphabet is the parent company of many businesses, but its most notable brand is Google. Google is how the vast majority of people access the right content on the internet, although that notion is under distress.

Many investors believe that generative AI could replace Google, although that remains to be seen. Google remains the top search engine used by many, and with its recent integration of AI search overviews, it has also evolved to adapt to this AI-centric view.

Additionally, Alphabet recently won a court case that allowed it to stay in its current state and continue paying Apple for the right to be the default search engine on its iPhones. This helps ensure Alphabet's status quo is maintained, and is an extremely positive sign for investors.

Apple is thriving on the status quo, as it hasn't really released a new feature or technology in recent years. That may change at its next release event, but investors will need to see what the market demand is for anything that Apple releases, as it could be a flop.

At their core, Alphabet and Apple are two businesses that want to maintain the status quo while expanding when possible. This doesn't really distinguish either of them from the other, so we'll need to examine their finances to determine the true best buy.

Winner: Tie

Alphabet is putting up better growth figures

Since 2023, Apple's growth has been practically nonexistent. That changed in Q3 FY2025 (ending June 28), when it delivered 10% revenue growth and 12% diluted earnings per share (EPS) growth.

AAPL Revenue (Quarterly YoY Growth) data by YCharts

Still, that pales in comparison to Alphabet's growth, which has been far stronger for much longer. In Q2, Alphabet's revenue rose by 14% and diluted EPS increased by 22%. That continues a long-standing streak of Alphabet outperforming Apple from this standpoint, and I wouldn't be surprised to see that pattern continue.

GOOGL Revenue (Quarterly YoY Growth) data by YCharts

Alphabet's faster growth stems from some of its other divisions, such as Google Cloud and Waymo. Both of these have massive upside and provide growth wings that Apple can't match.

As a result, I think it's fairly clear that Alphabet has far better growth than Apple.

Winner: Alphabet

Alphabet's stock is far cheaper

Valuation is another important consideration, as it's possible that the slower-growing company can be the better investment if it's priced cheap enough. However, that's not the case here. Apple's stock is significantly more expensive than Alphabet's, despite the latter's much slower growth.

AAPL PE Ratio data by YCharts

Although they used to trade at a similar price-to-earnings (P/E) price tag, a significant gap has opened up since mid-2024. However, after reviewing the growth charts from above, it's clear that Alphabet has grown much faster than Apple during this time frame.

As a result, Apple's stock has become far more expensive than it normally is, while Alphabet is just returning to its usual valuation range. This makes Alphabet a far better buy considering its growth.

Winner: Alphabet

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Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.