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Apple and Microsoft vie for top market spot, but only one will win

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Apple and Microsoft duking it out for $1 trillion crown

It's a $1 trillion cage match.

Apple's earnings beat this week pushed it back toward a $1 trillion market cap to snap at the heels of Microsoft for the title of world's largest publicly traded company. The iPhone maker is just another rally from eclipsing Microsoft's $1.07 trillion market value.

Craig Johnson, chief market technician of Piper Jaffray, is betting on one of those to keep rolling further beyond the trillion-dollar milestone.

"When I look at the chart of Apple versus Microsoft, no question that since 2017 Microsoft has been a better relative outperformer," Johnson said Wednesday on CNBC's "Trading Nation. " "But, when you look at the absolute performance on the chart … you can see that Apple's been forming this sort of symmetrical consolidation over the last 18 months and with the recent earnings announcement, we've now just broken topside of that consolidation."

Apple has trailed Microsoft over the past 12 months, though broke out in July. The stock climbed nearly 8% in July, four times the increase for Microsoft.

Johnson sees Apple's set-up pushing its stock back to retest its old highs at around $230.

"From my perspective, relative outperformance from Microsoft might be coming to an end. And I think at this point in time, Apple is probably a better trade on a relative basis versus Microsoft," he said.

Apple has another believer in Quint Tatro, president of Joule Financial.

"Our pick here is Apple. Microsoft has done an exceptional job. The cloud is no joke, the margins are unbelievable — but that's what you're banking on with Microsoft. With Apple, you know there's so many areas that they can go into in the future where I think they're going to just surprise us," said Tatro.

Apple's services segment, which includes Apple Pay and the App Store, has grown to encompass a larger portion of the company's revenue. It currently generates 14% of total sales, and is seen as the future for growth as iPhone sales slow.

"The stock is not cheap, selling 17 times forward earnings, growing those earnings just by a hair above double digits. But ultimately, the stock that yields 2% is a huge support by [Warren] Buffett, and then has the buyback as well," said Tatro. "Our bet is betting on the future, and our bet in this camp is definitely Apple," said Tatro.

Disclosure: Joule Financial owns AAPL.

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