A year ago, Apple (NASDAQ: AAPL ) and Google (NASDAQ: GOOG ) had cleared the $500 hurdle, setting fresh long-term sights on the magical $1,000 mark. Google stock was at $570. Apple shares were at $551.
A lot has happened since then, and now the two titans of tech are eyeing entirely different milestones. After a brutal stumble since peaking just above $700 last year, Apple shares have fallen well below $500. The stock would have to move 11% higher to regain $500. Google, on the other hand, has continued to be a winning investment. Google stock is now just 16% away from hitting quadruple digits.
Which one will get there first?
Apple has the shorter path to $500, but Google is the one with momentum on its side.
My call -- despite my trepidation when it comes to Apple in recent months -- is the iEverything company.
Arguing for Apple
Things haven't been going Apple's way lately. Margins and profit targets are shrinking.
When Apple reports its fiscal third-quarter results next month, analysts see a 21% decline in earnings on flat revenue growth. It's hard to decide which end of that income statement is more of a shock, but the flat sales growth really stands out. We've seen margins contracting for a couple of quarters now, but the argument has always been that Apple is reaching out to a larger market by offering older, smaller and scaled-back tablets and smartphones at lower markups. However, what does it tell you when revenue isn't growing despite the sacrifices on the bottom line?
The smartphone and tablet markets continue to grow -- Apple just isn't participating in that growth when it comes to generated revenue.
The silver lining here is that Apple has found a way to innovate its way out of its ruts in the past. New iPhones should be a few months away. Expectations are high for Apple to dive into a new product category with wearable computing and smart television being the two most popular possibilities.
Going for Google
Google's report next month should be a lot better. Analysts see growth at both ends of the income statement. Top-line growth is padded by the Motorola acquisition, but even Big G's organic growth has consistently clocked in at a double-digit clip in recent quarters.
Apple's biggest threat is Google's Android, but Google's biggest threat isn't really Apple.
There's nobody really invading Google's turf, forcing it into leaner markups. The closest thing that Google has to a potential disruptor would be Facebook (NASDAQ: FB ) , but that's only if the leading social networking website's billion active users begin leaning on Facebook instead of Google for its searches and online services. For now, that doesn't seem likely.
Facebook did introduce the potentially game-changing Graph Search earlier this year -- encouraging users to seek answers from trusted friends or friends of friends instead of traditional search -- but Google's latest quarterly report shows that it's not really eating into its business.
Google's gains have been well earned.
I'm still giving Apple the nod
Apple's a mess. Google's on fire. However, with Apple at 10 times next year's earnings -- and Google at 16 times next year's target -- it's hard not to favor Apple's chances of near-term appreciation.
Google stock may need a blowout quarterly report or two to get over $1,000, but all Apple needs is big announcement to get back up over $500. Apple may be out of favor now, but it's always a rollout away from a positive catalyst.
Agree with me? Disagree with me? Argue your case in the comment box below.
Got Apple? Get smart.
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.
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