With earnings season underway, some of the biggest names in tech have already reported earnings, including over half of the "Magnificent Seven" stocks. Two of the Magnificent Seven stocks that have reported are worth a closer look: Apple (AAPL +0.62%) and Meta Platforms (META 2.95%). Both tech giants reported results far above analysts' estimates this week, with double-digit revenue and earnings growth, and guided for a strong start to the calendar year as well.
But which of these two tech stocks is a better buy? For me, it's an easy choice: Apple.
Let me tell you why.
Image source: Apple.
Meta sees big growth, but also soaring costs
Social media company Meta Platforms reported fourth-quarter revenue of $59.9 billion, up 24% year over year. While this was the deceleration from Meta's 26% year-over-year growth in Q3, it was above the company's guidance range for revenue of $56 billion to $59 billion.
The standout figure from Meta's fourth-quarter update was its revenue guidance. The midpoint of management's guidance for first-quarter revenue, between $53.5 billion and $56.5 billion, represents 30% year-over-year growth. But before investors get too excited about this guidance, they should note that it reflects an estimated 4% tailwind to the quarter from foreign exchange, compared to only a 1% tailwind to Meta's fourth-quarter year-over-year revenue growth rate. In addition, management noted in its earnings call that it expects its full-year fiscal 2026 revenue growth rate to be below Q1 levels, so don't expect Meta to keep growing at this rate beyond fiscal Q1.
And while Meta's earnings per share of $8.88 handily beat analysts' consensus forecast for $8.22, it was only up modestly in comparison to its 24% revenue growth. Meta's earnings per share increased 11% year over year as the company's costs and expenses surged 40% year over year, reflecting management's aggressive investment cycle as it aims to capitalize on opportunities presented by AI (artificial intelligence).
Apple's earnings are soaring
Meanwhile, Apple posted 16% revenue growth in its fiscal first quarter (the period ending Dec. 27) -- a huge acceleration from its 8% revenue growth in the fourth quarter of fiscal 2025.
The quarter's results were fueled by a wildly successful iPhone cycle. The company's iPhone 17 family of smartphones helped Apple's iPhone segment post 23% year-over-year growth.
While iPhone sales were strong in all of Apple's geographic segments, they were especially strong in Greater China -- an important market that accounts for about 18% of the company's total sales. While Apple didn't specifically break out its iPhone sales in the market, Apple's total Greater China revenue rose 38% year over year, and Apple CEO Tim Cook said in the company's fiscal first-quarter earnings call that this growth was driven by iPhone.
Looking to fiscal Q2, management said it expected revenue to grow 13% to 16% year over year despite exiting the December quarter "with very lean channel inventory" due to "staggering" demand for iPhone, as Cook put it. The fact that Apple can still deliver this kind of growth, even when it expects iPhone supply to be constrained during the quarter, is remarkable.
Finally, Apple's services segment deserves attention. Though its 14% growth rate in fiscal Q1 wasn't as fast as its overall revenue growth rate of 16%, the segment notably boasts a gross profit margin about twice that of its products segment. Over time, I believe this segment will grow as a percentage of Apple's overall business and ultimately reduce the tech company's reliance on product revenue, while likely also helping it expand its gross profit margin.
Is Meta Platforms or Apple stock a better buy?
For me, choosing between Meta and Apple is easy. At their current valuations, I think Apple is a better investment. Not only is Apple growing its earnings per share at a far faster rate, but its business is arguably more durable, with and carefully integrated ecosystem of hardware, software, and services, and extremely loyal customers.
Meanwhile, Meta's business is almost entirely built around software and services, is limited primarily to the social media space, and is monetized almost entirely by advertising.
Looking at valuation, Apple trades at a slight premium to Meta as of this writing. It has a price-to-earnings ratio of 33, compared to Meta's of 30. But I believe the delta between these two companies should be even wider, given Apple's more robust business.
With this said, I think Meta is an attractive stock, but I believe Apple is the better buy today.
