Microsoft Corporation (MSFT)vs Intel Corporation (INTC)

Quick verdict

Microsoft Corporation (MSFT) and Intel Corporation (INTC) appeal to different investors. On our six-factor framework, MSFT scores 1 and INTC scores 5. INTC looks cheaper on the multiples that matter, while INTC grows faster and INTC earns higher returns on capital. Overall, INTC edges this comparison, but the right pick depends on whether you prioritise value, growth, income or balance-sheet safety.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Microsoft Corporation operates in Software—Infrastructure (Technology), while Intel Corporation sits in Semiconductors (Technology). Because both compete in the same sector, this is a direct head-to-head and the financial differences below are especially meaningful. MSFT carries a beta of 1.27 versus 1.66 for INTC, meaning INTC has historically been the more volatile of the two.

Valuation

On valuation, INTC is the cheaper stock. MSFT trades on a forward P/E of 16.83 and EV/EBITDA of 36.41, against 40.53 and 24.36 for INTC. Price-to-sales is 15.59 vs 12.99, and free-cash-flow yield is 5.6% vs 3.5%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

INTC is the faster grower. MSFT has compounded revenue at 13.4% over three years with EPS growth of 12.8%, while INTC has delivered 17.2% revenue and 15.0% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, INTC is stronger. MSFT posts a 18.8% operating margin, 47.0% return on equity and 31.5% return on invested capital. INTC posts 37.7%, 50.5% and 34.6% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

MSFT has the safer balance sheet. MSFT carries net-debt/EBITDA of 1.00x with a current ratio of 1.35, versus 2.98x and 3.56 for INTC. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year MSFT returned -13.8% against 103.1% for INTC; on a three-year annualised basis it is 4.7% vs 12.8%. MSFT yields 0.0% and INTC yields 3.7%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, INTC is the better fit on today's multiples. Growth investors will likely prefer INTC, which is expanding faster. Income investors should lean toward INTC for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour INTC for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: INTC
• Growth: INTC
• Income: INTC
• Quality: INTC

Frequently asked questions

Is MSFT or INTC the better buy right now?

Neither is universally "better." MSFT scores 1 and INTC scores 5 on our six-factor framework. INTC is cheaper, INTC grows faster, and INTC is higher quality — so the right pick depends on your objective.

Which stock is cheaper, MSFT or INTC?

INTC is the cheaper stock across forward P/E (16.83 vs 40.53), EV/EBITDA (36.41 vs 24.36) and price-to-sales (15.59 vs 12.99).

Which has grown faster, MSFT or INTC?

INTC has the stronger growth profile, with three-year revenue CAGR of 13.4% for MSFT versus 17.2% for INTC.

Which stock pays a bigger dividend?

MSFT yields 0.0% and INTC yields 3.7%, so INTC is the stronger income choice.

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