Microsoft Corporation (MSFT)vs Rivian Automotive, Inc. (RIVN)

Quick verdict

Microsoft Corporation (MSFT) and Rivian Automotive, Inc. (RIVN) appeal to different investors. On our six-factor framework, MSFT scores 2 and RIVN scores 4. RIVN looks cheaper on the multiples that matter, while MSFT grows faster and MSFT earns higher returns on capital. Overall, RIVN 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 Rivian Automotive, Inc. sits in Auto - Manufacturers (Consumer Cyclical). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. MSFT carries a beta of 1.13 versus 1.60 for RIVN, meaning RIVN has historically been the more volatile of the two.

Valuation

On valuation, RIVN is the cheaper stock. MSFT trades on a forward P/E of 16.83 and EV/EBITDA of 16.6, against n/a and -8.98 for RIVN. Price-to-sales is 10.1 vs 3.47, and free-cash-flow yield is 5.6% vs 1.1%. 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

MSFT is the faster grower. MSFT has compounded revenue at 17.8% over three years with EPS growth of 31.4%, while RIVN has delivered 8.4% revenue and 34.5% 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, MSFT is stronger. MSFT posts a 46.8% operating margin, 35.4% return on equity and 21.7% return on invested capital. RIVN posts -60.0%, -67.5% and -30.7% 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

RIVN has the safer balance sheet. MSFT carries net-debt/EBITDA of 1.00x with a current ratio of 1.28, versus -1.26x and 2.10 for RIVN. 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 99.3% for RIVN; on a three-year annualised basis it is 4.7% vs -1.2%. MSFT yields 0.8% and RIVN yields 2.1%. 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, RIVN is the better fit on today's multiples. Growth investors will likely prefer MSFT, which is expanding faster. Income investors should lean toward RIVN for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour MSFT 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: RIVN
• Growth: MSFT
• Income: RIVN
• Quality: MSFT

Frequently asked questions

Is MSFT or RIVN the better buy right now?

Neither is universally "better." MSFT scores 2 and RIVN scores 4 on our six-factor framework. RIVN is cheaper, MSFT grows faster, and MSFT is higher quality — so the right pick depends on your objective.

Which stock is cheaper, MSFT or RIVN?

RIVN is the cheaper stock across forward P/E (16.83 vs n/a), EV/EBITDA (16.6 vs -8.98) and price-to-sales (10.1 vs 3.47).

Which has grown faster, MSFT or RIVN?

MSFT has the stronger growth profile, with three-year revenue CAGR of 17.8% for MSFT versus 8.4% for RIVN.

Which stock pays a bigger dividend?

MSFT yields 0.8% and RIVN yields 2.1%, so RIVN is the stronger income choice.

Related comparisons

• AAPL vs MSFT
• AAPL vs RIVN
• AMD vs MSFT
• AMD vs RIVN
• AMZN vs MSFT
• AMZN vs RIVN