Microsoft’s Turn Is Coming in Stock Battle of Titans

Software maker’s shares are underperforming Apple’s this year

Analysts see Microsoft growth more durable than iPhone maker’s

Signage outside the Microsoft campus in Mountain View, California.Photographer: David Paul Morris/Bloomberg

In the stock market contest this year between the two biggest US companies, Microsoft Corp. has been no match for Apple Inc. With consumer spending under threat from a possible recession, some analysts are betting that performance is about to turn around.

Their valuations might be similar, but their business models are quite distinct. Much of Microsoft’s almost $200 billion of annual revenue comes from providing essential software and services to businesses. Meanwhile, Apple is more at the mercy of consumer demand and is exposed to markets like Europe and China.

“Microsoft has an advantage because it’s a sticky business,” said Gene Munster, managing partner of Loup Ventures. “You get the benefit of that stickiness during a recession. Microsoft most likely outperforms Apple over the next six months based on that.”

Microsoft shares have fallen 26% this year, wiping $669 billion from its market value, as the dollar soared against other currencies, reducing the value of the company’s international sales. Meanwhile, the iPhone maker has proved more resilient, with its stock down 18%, benefiting from investor perception that it’s a relatively safe haven in a bear market.