Apple or AMD: Morgan Stanley Selects the Superior Tech Stock to Buy

The first quarter earnings season has proven better than expected, and it looks like the worst-case scenarios of a tariff-fueled trade war won’t come to pass. The positive data and the dodged bullet have investors feeling optimistic, as the stock markets have regained last month’s losses.

The key theme in the markets, however, may not be the losses or the gains, but the volatility. That rollercoaster effect reflects where the markets truly are: stuck in uncertainty, as economists and investors alike remain unsure how tariffs, trade deals, inflation, and interest rates will ultimately shake out.

In the meantime, Morgan Stanley’s analysts are busy looking for the best stocks to buy in the current market conditions. Specifically, the experts are looking at Apple (NASDAQ:AAPL) and Advanced Micro Devices (NASDAQ:AMD), two giants of the tech industry, to see just which one is the superior tech stock to buy at the moment. Let’s take a closer look.

Apple

Apple is instantly recognizable. It’s a leader in the world tech scene, and is justly famous for its various devices, from mobile smartphones and tablets to desktop and laptop computers. On the financial side, Apple was the first publicly traded firm on Wall Street to reach a market cap value of $1 trillion, and followed that by breaking the $2 trillion mark. As a global company, making and marketing a wide range of high-end electronic devices, Apple is naturally sensitive to trade and tariff fluctuations – and its stock is down almost 18.5% from its December peak. Even after that loss, Apple can still boast a market cap over $3 trillion.

AAPL stock rebounded along with the broader markets following the tariff-induced meltdown in early April but took another hit following the release of its fiscal 2Q25 earnings report in early May – even though the company beat the forecasts at both the top and bottom lines.

So let’s take a look at that earnings report. Apple reported $95.4 billion in revenues for its second quarter, a figure that was up 6% year-over-year and beat the forecast by $840 million. The quarterly EPS, at $1.65 per share, was up 12 cents from fiscal 2Q24 and was 3 cents per share better than had been anticipated.

Several factors supported the company’s quarterly results. The Services segment of the revenue total came to $26.6 billion, was an all-time record for Apple Services, and was up 12% year-over-year. Within the larger Product segment, the iPad line showed a 15% y/y gain, and the Mac line showed a 7% gain.

On the negative side, Apple has been weighed by slowing sales in China and by the tariff outlook. In the earnings release, the company reported $16 billion in revenues from its Chinese business, missing expectations by $830 million. That miss reflects the serious pressure that the iPhone line is facing in the Chinese smartphone market, where it faces increasing competition from China’s domestic producers – Huawei, in particular, has been mentioned as one of Apple’s strongest competitors in China. Looking at the tariff situation, Apple’s management estimated that the company will face a $900 million cost in fiscal Q3, due to increased global customs duties.

That said, covering Apple for Morgan Stanley, analyst Erik Woodring explains why the company has sound prospects going forward, starting with the likelihood that it can expand iPhone sales in the near term. Woodring writes, “With the largest base of pent up iPhone demand ever (i.e. most elongated replacement cycles), new AI features rolling out (slowly) around the world, and a renewed focus on device form factor changes, we believe Apple can accelerate iPhone growth starting in FY26, before replacement cycles contract in the 2 years thereafter. When combined with consistent, double digit services growth, gross margin stability, and moderate operating leverage, we believe Apple can earn $8.06 in CY26 and $8.64 by FY27. Longer-term, investments in AI, payments, cloud, health, and home, and long runway to grow spend per user from $1/day today are key arguments for sustained long-term growth and value creation.”

Accordingly, Woodring gives AAPL an Overweight (i.e., Buy) rating, along with a $235 price target that implies an 11% upside potential for the next 12 months. (To watch Woodring’s track record, click here)

Apple has picked up 29 recent analyst reviews from the Street, and their breakdown of 17 Buys, 8 Holds, and 4 Sells gives the stock its Moderate Buy consensus rating. Apple shares are trading for $211.26 right now, and the $228.65 average target price suggests that the stock will gain 8% by this time next year. (See AAPL stock forecast)

Advanced Micro Devices

The second stock on our list today is AMD, a known player in the semiconductor chip industry. With a $190 billion market cap, the firm claims a spot amongst the top ten largest chip makers, while the company generated $25.8 billion in revenues last year. AMD has a solid reputation for quality, high-end semiconductor chipsets, and is well-known for its consumer-oriented PC processor units.

While AMD built itself up on its success in the PC markets, the company has been eyeing the opportunity in the AI and data center segments of the chip industry. The company released several new products this year, with a focus on the expanding AI market. Among these new products are AI-capable chips in the established Ryzen line that aim to build on AMD’s proven PC expertise – the new chips are designed to run AI applications on consumer or small business PCs. The company has also scored a win with Google Cloud, and that tech major is using AMD’s 5th-generation EPYC processors in its new C4D and H4D virtual machines.

AMD is looking ahead, too, and planning for the next round of high-end chip releases. The company announced in April that its next-generation EPYC processor, currently being developed under the codename ‘Venice,’ is being taped out and brought up on the TSMC advanced 2nm (N2) process technology. Venice is the first such high-performance computing chip in the industry to use this new tech from TSMC, and is on track for a launch next year.

That’s the good news. The bad news is that AMD is simply not currently playing in the same league as the multi-trillion-dollar industry leader, Nvidia. While AMD can match its giant competitor on quality, its market share in the AI chip market, which Nvidia dominates, remains modest.

Turning to the company’s financial results, we find that AMD, despite not being able to match the competition on scale, is still able to meet and beat the Street’s expectations. The company’s 1Q25 results showed a top line of $7.44 billion. This was $320 million more than had been expected, and up an impressive 36% year-over-year. At the bottom line, AMD realized a non-GAAP EPS of $0.96, up 34 cents per share from the prior-year period and 3 cents per share ahead of the forecast.

For 5-star analyst Joseph Moore, who covers AMD for Morgan Stanley, the key point here is that AMD has yet to prove that it can break into the large and lucrative AI market at the hyperscale level. Moore says of AMD, “We still believe that while AI does not drive the earnings, it does drive the multiple, and the lack of visibility remains a challenge despite management’s second half optimism. Somewhat in contrast to current sentiment, we still believe that we are in a very strong investment phase for AI hardware, which should help, but in a very competitive market where NVIDIA and the ASIC vendors are all moving quickly we will need to see a very strong MI400 offering next year for AMD to cement that position. AMD’s position in all of its other markets remains strong, given Intel’s disarray, but AI remains uncertain.”

Moore puts an Equal Weight (i.e., Neutral) rating on AMD, and his $121 price target points toward a modest gain of 3% over the coming year. (To watch Moore’s track record, click here)

The broader market is still willing to buy AMD. The stock’s 31 ratings include 22 Buys and 9 Holds, for a Moderate Buy consensus rating, and the $126.55 average price target implies an 8% one-year upside from the current trading price of $117.17. (See AMD stock forecast)

With the facts laid out, it’s clear that Morgan Stanley sees Apple as the superior tech stock to buy, given today’s market conditions.

To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.