Apple (NASDAQ:AAPL) stock’s massively down from its highs, but it’s up 7% over 12 months. Alphabet (NASDAQ:GOOGL), on the other hand, is down 12%, with search concerns weighing on the stock.
Why compare them? Well, they’re both tech giants with reasonable valuations. And they operate in some of the same industries, although they do employ different business models. But which one’s best value?
1. Forward price-to-earnings (P/E)
Apple’s forward P/E ratio’s expected to fall from 27.25 times in 2025 to 19.27 by 2028, reflecting steady earnings growth but a premium valuation. By contrast, Alphabet’s forward P/E drops from 15.85 to just 11.19 over the same period.
This means Alphabet shares are trading at a much lower multiple of future earnings. For context, Apple’s P/E remains well above the sector median, while Alphabet’s is at or below its sector average, making Alphabet look much cheaper on this metric.
2. Revenue growth
Apple’s revenue’s forecast to rise from $407bn in 2025 to $489bn by 2028, with annual growth rates between 4% and 6.7%. Alphabet however, is expected to grow faster, from $387bn in 2025 to $518bn in 2028, with annual growth rates hovering around 10%. This faster top-line expansion’s a key reason why Alphabet’s valuation, despite being lower, could be more compelling for growth-focused investors.
3. Price-to-earnings-to-growth (PEG)
The PEG ratio helps investors judge whether a stock’s valuation is justified by its growth. Apple’s forward PEG sits at 2.69, indicating its shares are expensive relative to its earnings growth. Alphabet’s PEG’s just 1.07, suggesting a much more attractive balance between price and growth. Generally, a PEG near one is considered fairly valued, while higher numbers can signal overvaluation. Tech giants, companies with big moats, or lots of cash, can easily trade higher.
4. Net debt
Apple holds $48.5bn in cash but carries $98.2 billion in debt, leaving it with net debt of about $50bn. That’s actually unusual for these mega-cap tech stocks — most have net cash. Alphabet, on the other hand, boasts $95.3bn in cash against just $28.5bn in debt, giving it a net cash position of nearly $67bn. This financial strength gives Alphabet more flexibility to invest, weather downturns, or return capital to shareholders.
A clear winner
While Apple remains a cash-generating machine with a loyal customer base, Alphabet stands out for its faster growth, cheaper valuation, and fortress-like balance sheet. For UK investors seeking a blend of value and growth over the next few years, Alphabet may be the stronger pick based on current forecasts.
That’s definitely my opinion. However, investors may want to consider both. Apple, with its dominance in the hardware sector, remains an appealing investment to many.
Personally, I’ve been adding Alphabet to my portfolio. Despite some concerns about loss of search dominance, it’s a gigantic business with lots of supportive trends. It’s also very cheap compared to its peers.
