2 Stocks That Will Be Worth More Than Apple by 2028

After a recent rally, Apple (NASDAQ: AAPL) is back in the driver's seat as the second-largest company in the world, well behind Nvidia (NASDAQ: NVDA). However, I don't think it will stay there for long. In fact, I think by 2028 Apple will be permanently replaced by two stocks it has battled with for a long time: Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Both of these companies have much stronger tailwinds blowing in their favor than Apple, and over the next few years, I expect these two to surpass Apple and never look back.

Image source: Getty Images.

What's wrong with Apple?

The first question we need to tackle is why Apple will be passed by. Even the most loyal Apple fan is well aware that Apple is way behind in the artificial intelligence (AI) arms race and hasn't launched a game-changing product in multiple years. Apple is relying on the hard-earned market share it won over the past decade, but the question is, will that last? If it doesn't, Apple could be in trouble, as many of the offerings from competitors offer more advanced AI features. While this hasn't caused many Apple users to defect, a time will come when it does.

This lack of innovation is showing up in Apple's growth, which has been fairly lackluster outside of its most recent quarter.

AAPL Revenue (Quarterly YoY Growth) data by YCharts

2026 will be a critical year for Apple. If Apple can sustain this mid-teens growth rate, then I may have to reconsider my position on Apple being passed up by Microsoft and Alphabet. However, if it returns to its usual mid-single-digit growth rate, then this investment thesis is still applicable. Despite only one quarter of solid growth, Apple trades at a higher premium than either Microsoft or Alphabet.

A price-to-earnings ratio of 33 seems rather high for a company that has only recently started posting good results again, and when you look at Microsoft and Alphabet, this discount doesn't make sense.

AAPL PE Ratio data by YCharts

Microsoft and Alphabet are seeing huge growth in cloud computing

Both Microsoft and Alphabet grew faster than Apple during their last quarter, with Alphabet's revenue rising 18% and Microsoft's increasing by 17%. However, each of them has a cloud computing segment that's leading the way for each business.

Microsoft Azure rose an impressive 39% year over year during its last quarter, while Google Cloud rose an astounding 48% year over year. Both of these companies are highly exposed to the AI build-out. With the vast sum of money being spent in this sector, both Google Cloud and Azure will see their revenue continue to grow at a rapid pace over the next few years.

This should help keep their overall growth rates faster than Apple's, allowing them to open a gap that's already formed in the net income side of things. The only reason Apple is worth more than either company right now is due to its higher valuation. Both Alphabet and Microsoft make more money than Apple, and with them likely growing at a faster rate over the next few years, this gap will widen.

AAPL Net Income (TTM) data by YCharts

Because of that, I'm confident in saying that both Microsoft and Alphabet will be larger companies than Apple by 2028. Furthermore, they will permanently surpass Apple due to their superior growth rate and outstanding generative AI technology. If Apple can start launching innovative products and put out a respectable AI offering, then I may revisit this idea. Until then, Alphabet and Microsoft look like more promising companies and investments.

Keithen Drury has positions in Alphabet, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia and is short shares of Apple. The Motley Fool has a disclosure policy.