Apple Inc. (AAPL) Manages the Street, May Win Next Round

The reason, Google Inc (NASDAQ:GOOG) bulls say, is because while software trumps hardware, cloud trumps both, and Google is the dominant owner of Internet infrastructure, now counting for one-quarter of all North America’s Internet traffic.

Google’s stock price is high because it has even fewer shares than Apple – just 328 million against Apple’s 940 million. Its margins are equivalent to both its rivals, about 25%, but it’s still generating 20% year-over-year growth, while Apple’s top line is stalled out and Microsoft Corporation (NASDAQ:MSFT)’s top line is up only 10% year-over-year.

Simply put, Google Inc (NASDAQ:GOOG) is priced to perfection, and its business model is due to change. The launch of the Moto X later this year will be backed by $500 million in advertising, which is more than either Samsung or Apple spend on all their products. If Moto X succeeds in taking sizable market share, Google becomes a hardware company, while if it fails to do so, Google Inc (NASDAQ:GOOG) fails entirely.

Google, in other words, has become a speculative investment, at least in the near term.

My Foolish bottom line

I have personally been accumulating Apple Inc. (NASDAQ:AAPL) shares during the last year, and got out of Microsoft a year ago. I still have 10 shares in Google, but I cut my stake in half when it hit $800 and I am not prepared to buy any more.

Your mileage, of course, will vary. My view is that Apple has some upside potential and very limited downside, while Microsoft has limited upside and some downside, and Google Inc (NASDAQ:GOOG) currently has more downside than upside.

All these are good companies, however. If you have a five-year investment horizon, you can buy any of these companies and sleep easily. Take Microsoft Corporation (NASDAQ:MSFT) for yield, Apple for the combination of yield and growth, Google Inc (NASDAQ:GOOG) for growth. But then avoid the media for that entire period because, as former Fed chairman once said when asked by a woman what the market would do, “prices will fluctuate.”

The article Apple Manages the Street, May Win Next Round originally appeared on Fool.com and is written by Dana Blankenhorn.

Dana Blankenhorn owns shares of Apple and Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT). Dana is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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