Finally, in gaming, it's second in hardware sales to Sony's ( SONY) PlayStation 5, and owns the popular Minecraft IP. In cloud services, it is #2 after Amazon. It no longer has a meaningful presence in smartphones, as it failed in that market. It controls Windows, the most popular computer operating system, but that product category has plateaued. It has some of the advantages that Apple and Google have, but not to the same extent. Additionally, they have factors that can lead us to infer continued high market share-brand loyalty in Apple's case, a resilient ad platform in Google's case. So we can see that Google and Apple both have high market share. Smartphone operating systems - #1 by revenue, #2 by user count.Ĭomputer operating systems - #2 after Windows. Smartphones - #2 after Samsung ( OTCPK:SSNLF). As a result, Apple is #1 or #2 across multiple product categories, including: Apple has a huge fan community on YouTube, which helps it sell products without extra ad spend. This stems from its brand (the most valuable in the world), which helps it retain customers, and its interconnected ecosystem, which encourages customers to buy multiple products. We can expect Google's moat to persist, because it benefitted from the very same Apple policy changes that hurt Meta, proving it has a resilient model competitors can't touch. In second place after Google is Meta Platforms ( META), which has gained at Google's expense over the last decade, but is experiencing issues this year due to Apple's privacy changes and competition from TikTok. It's the #1 online ad platform in the world, with 26.4% of the market. Google and Apple both have wide moats, Microsoft's position relative to competitors is less robust.įirst, we can look at Google's moat. One area where Google and Apple both have an edge over Microsoft is competitive dynamics. In the ensuing paragraphs, I'll explain why I think that way. However, factoring in price, competitive dynamics, and growth, I find Google and Apple to be better bets. I still hold the Invesco QQQ Trust ( QQQ), which has a high level of MSFT exposure. None of this is to say that I'm actively bearish on Microsoft. So, I added some GOOGL and AAPL-the former stock has fallen about as much as Microsoft, the latter has given me a gain.
Apple was on the pricey side at that point, but not as much as Microsoft (it traded at around 24 times earnings). In particular, I noticed that Google had gone all the way down to 20 times earnings, despite still having double digit revenue growth, while Apple was gaining market share in China. After watching the NASDAQ-100 tumble, I noticed that valuations were getting cheap. Later, though, I started thinking about getting into tech stocks again. At any rate, I booked some small profits on energy stocks and didn't buy anything new for a while after that. I was only half right about the first part (rising interest rates helped retail banks but not investment banks), I was 100% correct about the second part.
I figured that rising interest rates would help banks earn more money while the economic recovery from COVID-19 would boost energy stocks. Initially, I invested the proceeds I got from selling Microsoft into classic value plays: banks and energy stocks. NASDAQ trading after I predicted a tech crash (Google Finance) After the article published, the NASDAQ-100 fell a further 28%. Shortly after these sales, I wrote the article " The Tech Stock Crash Will Likely Get Worse," which explained my reasons for being bearish on tech stocks. The timing on those sales was pretty good because I booked gains on both (33% on MSFT and 20% on ADBE), while limiting my exposure to the tech bear market. It has a sky-high 11.4 price-to-book ratio to this day.Īround the end of 2021 I knew that the Federal Reserve was planning on hiking interest rates, so I sold the two most expensive stocks in my portfolio: MSFT and Adobe ( ADBE). Today, Microsoft only trades at 26.5 times earnings, but it was above 30 around the time I sold it. When researching the stock, I discovered that its revenue growth in non-cloud businesses was slow, and that its valuation was expensive. When I bought MSFT, I was pretty much betting on Azure. So I figured that MSFT was the safer cloud bet. 42%), but Azure was profitable while Google Cloud wasn't. Alphabet's ( GOOG ) Google Cloud was growing faster than Microsoft's Azure at the time (54% vs. I bought it after reading about the company's success with Azure-the second fastest growing of the big tech cloud services. Microsoft ( NASDAQ: MSFT) is a stock that I held through the 2020/2021 NASDAQ rally and managed to sell before it came crashing down. Dimitrios Kambouris/Getty Images Entertainment
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