It’s no secret that mega-cap tech stocks are where many investors spend a disproportionate amount of their attention right now. That’s for good reason – these stocks are the key reason why markets continue higher, given their weighting and importance to the overall economy.

I’m going to do a key comparison of two so-called Magnificent 7 tech darlings here. These are two companies that have the potential to move the market with a big valuation swing on an intraday level. Accordingly, I do think it’s important to pay attention to what this consumer discretionary giant and social media kingpin are up to.

Let’s do a compare and contrast with two of my favorite long-term holdings.

Key Points About This Article:

• Apple and Meta are two of the most recognizable American brands, and among the best companies in the world.
• Let’s do a compare and contrast to see how each of these companies stack up to each other on a number of metrics.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Apple (AAPL)

Apple (NASDAQ:AAPL) certainly faced challenges in 2024, including an antitrust lawsuit and slowing iPhone sales in China. However, its stock still rose 20%, just lagging the performance of the overall S&P 500 index. Early in the year, Apple lagged peers in AI but introduced Apple Intelligence in June, bringing AI features to select devices, including the iPhone 15 Pro and upcoming iPhone 16. With these features set for limited release soon, Apple’s Oct. 31 earnings report will reveal whether iPhone sales have improved.

Of course, much of the story around Apple of late has been tied to AI. Most companies are announcing their visions for how they’re going to integrate AI into their products. In September, Apple launched Apple Intelligence, a suite of AI tools for iPhones, iPads, and Macs. These features enable users to write and summarize texts, edit photos, and generate personalized images, with enhanced privacy by limiting data usage to specific requests. Siri also received an AI-driven upgrade for better natural language understanding. These new tools are expected to boost device sales, raise prices, and increase high-margin services revenue through the App Store. 

The question is whether these AI advancements will lead to durable and sustainable revenue and earnings growth acceleration moving forward. Personally, I’m not 100% sure that will be the case. But with 2.2 billion devices in use, Apple is well-positioned to capitalize on this AI growth, and there’s a reason why Wall Street remains bullish on this name. Indeed, any investor that’s sold Apple short over really any time frame over the past two decades has been killed – it’s hard to make a bet that this time will be different. 

Meta Platforms (META)

Meta Platforms (NASDAQ:META) is perhaps best known as the parent company of social media giants Facebook, Instagram, WhatsApp, and Messenger. The company earns its revenue primarily by selling ads, with user engagement driving profits. Like Apple, Meta is looking to build on its portfolio of world-class offerings to leverage AI to boost engagement. If users can see value in these AI tools, they may stay engaged longer, and lead to more ad revenue for the company.

Meta’s thinking is that AI tools will be able to benefit businesses looking to launch ads as well. With the launch of Meta AI, the company is looking to utilize its AI virtual assistant to help consumers find what they need. But the company is also working on its next iteration of this technology with its Business AI, which aims to equip merchants with AI agents to handle customer queries and sales, unlocking new revenue streams.

Meta’s AI, powered by its Llama large language model (LLM), demands significant computing capacity. Developing Llama 3.1 required 16,000 GPUs, primarily from Nvidia. Meta is now working on Llama 4, expected to need 160,000 GPUs. CEO Mark Zuckerberg aims to bring 600,000 GPUs online by late 2024, positioning Llama 4 as an industry benchmark but at a high cost, reflecting Meta’s long-term AI ambitions.

From a growth perspective, and the ability to truly create top and bottom-line impacts from its AI integrations, Meta is certainly an intriguing pick here. Ever since Zuckerberg started focusing on efficiency, the market has been bulled up on this name. I’m thinking this perspective is likely to continue for some time, with Meta being a clear winner over the long-term.

The Verdict

In my view, Meta is the likely winner over the medium-term, for a number of reasons.

First, I much prefer the company’s current valuation multiple relative to its growth rate. Apple is currently valued at roughly 35-times sales with flat or negative growth seen in most quarters over the past two years. Meta, on the other hand, is growing nicely at a multiple of just 28-times earnings. I get the premium multiple the market is assigning to Apple due to its brand value, but that’s a little too steep of a premium to pay right now, in my view.

Secondly, I do think if a recession does hit, that Apple will be far more impacted than Meta. Social media activity actually surged during the pandemic, and companies raced to add more advertising to social media platforms as folks were stuck at home scrolling their phones. And while stimulus checks did allow Apple to stave off an even greater earnings decline, it’s true that even some higher-income consumers are feeling stretched. That’s not a place I’d prefer to be if we do see a recession play out.

I think Meta is the better value pick, and the safer pick, right now. But to each their own.

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