Is Apple the new Microsoft?

Apple $AAPL built its modern empire on a simple promise: The future would arrive neatly boxed, beautifully staged, and — crucially — worth the hassle. People updated because they wanted to. People upgraded because they couldn’t not. Apple would watch the world sprint to get the latest product or software like they were joining a cultural moment, even when the “moment” was mostly a slightly different lock screen or a new way for your phone to nag you about bedtime.

Now, that consumer sprint looks more like a shuffle — cautious, slightly annoyed, and faintly suspicious that “new” means “more intrusive” rather than “more exciting.” Apple’s old trick was making the future look fun. Its new trick is making the present feel expensive to leave. 

Heading into Thursday’s earnings, Apple looks increasingly like a company that wins by running a system — a mature platform that turns an installed base into recurring revenue, ships upgrades like maintenance, and measures success in retention as much as (if not more than) excitement. That model prints cash when the default holds. It gets uncomfortable when “default” becomes a fight. 

Analysts still expect Apple to post a record holiday quarter — consensus calling for revenue of about $138.4 billion (up about 11%) and EPS around $2.67 — but this hardware icon is trying to convince the market it deserves a software-and-services multiple while its most important product category matures and its platform gets dragged under regulators’ fluorescent lighting.

Apple has entered its Microsoft $MSFT era. The iPhone is becoming Windows, the layer you rely on, tolerate, and maintain. Services is becoming Office, the high-margin suite riding on top of a captive base. And everyone is starting to wonder: OK, Apple, what’s next? Being boring is acceptable. Being irrelevant isn’t.

Microsoft’s ecosystem was developers and workplace dependency; Apple’s is consumer life integration — payments, devices, accessories, identity, the quiet convenience of everything working together. Apple made that integration feel creative and human, then spent years mocking Microsoft for being the uncreative incumbent. Now, Apple risks falling into that same trap: massive, everywhere, and slowly losing the ability to convince people it’s steering the future.

Apple’s stock has been acting like the market senses the shift, too. Yes, it’s a company with an almost-$4-trillion market cap. But earlier this month, its shares were on pace to match their longest losing streak since 1991. And now, the market is heading into Apple’s earnings with a familiar debate playing out in analyst notes: strong iPhone demand and resilient margins on one side, and a tougher setup ahead on the other — costs, comps, and the creeping feeling that the iPhone isn’t a product category that can still surprise anyone.

Microsoft lived through its dominant-platform chapter. Then it drifted; still massive, still profitable, still everywhere, no longer setting the agenda. Microsoft proved you can be the default, lose the future, and survive — but it also learned that only a new engine brings you back to relevance. Apple’s last true platform breakthrough (the Apple Watch, which it originally got wrong) is getting old enough to feel like history, and AI is the next interface shift the whole industry is reorganizing around. And Apple’s AI story is quiet at best.

Apple has reached the default stage. The next question is whether it already has the next engine, or whether it’s about to run out of road.

Windows in your pocket

Microsoft’s Windows era was defined by ubiquity. People didn’t “shop” for Windows so much as they ended up inside it — at work, at home, everywhere. Apple’s iPhone is increasingly in that posture. The device is no longer “a phone” so much as the primary personal computing layer for a huge base of people: identity, payments, messages, photos, work apps, health data, the entire muscle memory of modern life.

The hardware machine still throws off staggering revenue — this iPhone 17 was remarkably (and perhaps surprisingly) strong; iPhone sales growth is expected to be the strongest in more than four years — but the story of how the segment is growing has started to sound familiar. The company says iPhone net sales rose in 2025 “due to higher net sales of Pro models” — the same premium-mix growth phenomenon that Microsoft leaned on for years in the PC era, when the platform was everywhere and the money was in versions, upgrades, and enterprise-grade configurations.

The iPhone has stopped behaving like a consumer product you upgrade for fun and started behaving like an operating system you live on — and Apple’s business is adapting accordingly, turning “owning an iPhone” into a long relationship measured in renewals and bundles. Apple has become a toll collector with great industrial design.

China used to be Apple’s most cinematic growth narrative. But in fiscal 2025, Greater China net sales fell 4% to $64.4 billion — even while offering limited-time discounts in China on iPhone models, part of the continued pressure to keep demand humming in a more crowded premium market — and Apple attributes the decline “primarily due to lower net sales of iPhone.” Mizuho has warned that the smartphone market is stagnant enough that 2026 could get bumpier, even if Apple keeps leaning on that premium mix.

Wall Street, for its part, is trying to decide whether the current iPhone cycle is proof of renewed consumer appetite or a late-cycle spike that sets up tougher comps. “Great quarter” doesn’t mean “great future.” Some bullish analyst notes going into earnings have leaned on strong demand signals for Apple’s newest iPhones, particularly higher-end models, while more cautious notes have flagged margin and demand risks later in 2026 as component and memory costs rise and the global smartphone market stays choppy. The smartphone world might get more expensive right as replacement demand gets more optional.

Apple has shifted from selling a dream to managing a base, from launching spectacles to keeping the suite indispensable, from “what’s the next big thing?” to “how many reasons can we give you not to leave?” Apple’s earnings now land inside that question: whether it can keep turning habit into revenue while the market demands an exciting second act.

The business has tilted toward Office math

Microsoft’s genius was Office: Once Windows was the floor, Office became the high-margin annuity riding on top of it. Apple’s version is Services, the sticky, profitable layer that makes the whole empire feel less like a product company and more like a platform tollbooth — see: subscriptions, payments, cloud/storage, App Store economics, bundles. 

Apple’s services story has gotten big enough to brag about in public, and specific enough to sound like a company that’s learned to sell a suite. In January, Apple touted a “record-breaking year” for Services and said net sales grew 14% in fiscal 2025, and Apple has been pointing to higher net sales from “advertising, the App Store, and cloud services.” In 2025, Services’ gross margin was 75.4%, compared with 36.8% for Products. Services produced $82.3 billion in gross margin dollars in 2025, against $112.9 billion for Products, meaning the suite is now doing a very large share of the empire’s profit work. That’s Office math. The device gets you in the door. The recurring layer keeps charging rent.

But Jefferies recently cut its price target and pointed to Services slowing — including App Store growth data — plus concerns around Google $GOOGL-related ad revenue, with the implication that iPhone demand is already reflected in the stock. When the multiple leans on the suite, any wobble in Services momentum starts looking like a giant flashing light.

Still, Apple’s financial center of gravity has started to move from “sell the box” to “monetize the environment,” which is exactly how mature platform companies compound. The most consequential Apple products now aren’t always the ones you can hold. They’re policies, defaults, and distribution. The magic shows up in the margins. Now, Apple doesn’t need every customer to feel delighted, it just needs them to feel locked in — and to keep paying. Microsoft did this, too, in its own way. Office wasn’t just software; it was the workflow itself. Once a platform owns your habits, it can sell convenience and call it productivity. 

Wall Street has started valuing Apple in that hybrid language: part hardware cash machine, part software-and-services annuity. Investors’ bullish case for the company is that it deserves a richer multiple because the business is getting steadier and more recurring. Their bear case is that Apple is asking the market to pay a software multiple for a company whose defining product is aging into normalcy, while the parts of the ecosystem that behave most like “software power” are the same parts regulators are circling.

The next-engine question

Every dominant platform eventually has to face up to the same thing: the world moves, and the platform has to catch up without admitting it’s chasing everyone else. 

Microsoft didn’t “die” when Windows stopped feeling like the future. It became legible. It became steady. It became, for a long time, a company the market struggled to value as a growth story — even while it kept printing cash and sitting inside basically every office building on Earth. It took until 2017 for Microsoft’s market value to climb back above $500 billion for the first time since 2000, a long time to be everywhere and still be treated like yesterday’s news.

Then, Microsoft built another engine. Microsoft launched Office 365 globally in 2011, bundling Office with cloud services in a subscription package. Satya Nadella became CEO in February 2014 and pushed harder into the cloud. AI later became an accelerant, not the original reinvention engine. So what is Apple’s version of Azure? What is Apple’s new compounding engine that makes the default feel like the beginning of something again?

AI is the most plausible candidate for a new interface layer. The trouble is that Apple’s AI story, so far, has carried a whiff of “keep doing what we’re doing” more than “new platform.” Apple’s most visible “next platform” attempt — spatial computing — hasn’t earned inevitability yet. Recent reporting has said Apple scaled back Vision Pro production and marketing after weak sales, with IDC estimating roughly 45,000 units shipped in Q4 2025. If the “next engine” isn’t compounding, the pressure shifts back on the past projects to do all the future work, too.

Earlier this year, Apple (as expected) announced that it would use Google’s Gemini models for a revamped Siri under a multiyear deal. That move might temporarily make investors exhale — look: Apple has AI! — but if the next default layer of computing lives in AI, Apple might want to, at some point, own the core capability, not rent it. In 2001, Borders handed its e-commerce operation to Amazon $AMZN — a deal The Guardian described in a kind of business obituary: Amazon taking over Borders.com. Borders outsourced online sales to Amazon from 2001 to 2008 and moved slowly on e-commerce. Borders is no longer around; Amazon is.

Apple isn’t Borders. Apple controls the device, the OS, the distribution, the billing relationship, and a huge installed base. Owning the interface is a powerful form of leverage in an AI world where models are increasingly commoditized and competition shifts to integration. Still, the fears around Apple are very real: If AI becomes the next default computing layer, partnering can start looking like dependency. Google now gets to ride inside Apple’s distribution.

This Big Tech earnings season makes Apple’s posture look unusually exposed. Right now, megacaps are getting graded on AI ROI and capex discipline — and Apple’s posture of letting someone else (and a rival, at that) own the “knowledge” layers starts to look like the easy and unimaginative way out. AI is where Apple’s best instincts — privacy, polish, control — collide with the moment’s worst pressure — speed, scale, competition — and the result will tell investors whether Apple’s future is the lucrative, steady kind of boring that Microsoft perfected, or the anxious kind that shows up when a platform senses a regime change and tries to patch it mid-flight.

Apple is about to report results that could easily be excellent and still feel unresolved. The story the company wants to tell is simple: the iPhone remains indispensable, and everything attached to it keeps expanding. The story the world keeps testing is also simple: indispensability isn’t the same as enthusiasm, especially when phones last longer, updates feel optional, and the “new” parts of the experience increasingly live inside software choices people didn’t explicitly request. 

That’s the frame heading into earnings. Apple can still have a strong cycle and still be drifting into a different kind of growth — one built on keeping customers inside a system rather than constantly persuading them to buy into a new one. Apple can be operationally excellent and narratively unconvincing in the same quarter. Investors keep looking for the next act, and Apple keeps getting paid for the current one.