Check out the latest Apple and Microsoft earnings call transcripts.

For a long time, Apple (AAPL -0.82%) reigned as the most valuable U.S. company. That situation changed relatively recently, with software giant Microsoft (MSFT 0.22%) taking the pole position in the battle of the market caps

After Apple's negative guidance revision on the evening of Jan. 2, Microsoft extended its lead, as its shares were only down (as of this writing, anyway) about 2% while Apple stock is down nearly 9%.

Apple exec Craig Federighi on stage at an Apple event.

Image source: Apple.

Although it might be tempting in light of Apple's sharp decline to make the call that Apple is a better buy than Microsoft, I'm not convinced. Here are three reasons Microsoft looks more attractive to me.

Better diversification

Nearly 63% of Apple's fiscal 2018 revenue came from iPhone sales. Now, on one hand, that figure is so high because the iPhone has been a runaway success over the years, growing into a franchise that delivers substantial revenue and profit for the company.

On the other hand, for investors looking to invest in the company today, that heavy dependence on the iPhone business is almost a liability. Indeed, Apple blamed its lower-than-expected business results for the first quarter of its fiscal 2019 on a shortfall in iPhone sales. 

By contrast, Microsoft is highly diversified. The company is a leader in many of the markets that it participates in, but no single product truly dominates Microsoft's business results. Indeed, each of Microsoft's three major reporting segments makes up roughly a third of the company's overall revenue, and the software giant offers many different products within each of those broader segments.

Segment Fiscal 2018 Revenue (In Millions) Percentage of Total
Productivity and business processes $35,865 32.5%
Intelligent cloud $32,219 29.2%
More personal computing $42,276 38.3%

Data source: Microsoft 10-K filing. Author calculations.

Microsoft's better diversification makes it, in my view, less risky than Apple.

Better growth prospects

Apple's growth prospects for the next couple of fiscal years were already fairly dim; analyst consensus called for the company's sales to grow by 4.6% in fiscal 2019 and then by 4.1% in fiscal 2020. Microsoft, on the other hand, is expected to post two consecutive years of double-digit revenue growth -- 12.7% in fiscal 2019 and 10.6% in fiscal 2020. 

Now, keep in mind that the Apple numbers look stale -- they likely don't reflect the slew of estimate cuts that have happened since Apple's downward guidance revision and the cuts that may still be yet to come. Given that the tech titan is forecasting a year-over-year decline in revenue for the first quarter of its fiscal 2019 -- its seasonal peak -- the odds look good that Apple will post a decline for the full fiscal year 2019. 

While things could conceivably get better for Apple during its fiscal 2020, I'd be willing to bet a good chunk of change that Microsoft will handily outgrow Apple over at least the next two years.

Better sentiment

Although this is a far more qualitative measure than the other two factors that I mentioned, it's still an important factor to consider: investor sentiment. The sentiment around Apple right now seems quite poor while sentiment around Microsoft is quite good.

Now, the sentiment around any stock can change over time based on business performance and news flow, but I think that it could be a long time before the attitude around Apple turns. It's not clear when the company's iPhone business will find a bottom and, frankly, it doesn't seem as though sentiment around the company will improve until that happens.

Microsoft, however, has the proverbial wind at its back. The PC market -- to which the company is exposed to via its Windows operating system as well as its Surface line of devices -- is showing signs of life (although we'll see if that persists into 2019). The company's Azure Cloud business is growing rapidly. Gaming is a hot trend right now, and Microsoft is exposed to it via both its Xbox franchise as well as the fact that its Windows PC operating system is the gold standard for PC gaming. 

While patient investors that believe that, over the long term, Apple can come roaring back, those that are less patient -- or simply have shorter-term investment horizons -- might find Microsoft stock a less stressful place to have their money.