Apple is close to a record. Netflix is ​​down by more than half. I would only buy one.

Apple (AAPL -1.23%) shares are around $350 as I write, near their all-time high and up about 29% so far in 2026.

Netflix (NFLX +0.05%) Stocks, meanwhile, hit their lowest level in a year on October 29. Near $62 today, the stock is about 54% below the closing record set in June 2025 (adjusted for the company’s 10-for-1 stock split last November).

On valuation, Netflix wins easily. Using analyst forecasts for 2027, Netflix’s price-to-earnings ratio is about 17. Apple’s, based on expected earnings for its 2027 fiscal year (the year ending next September), is about 37. And Apple’s own forecasts suggest slower growth for the quarter it reports on November 2.

But I don’t think the cheapest stock is automatically the best buy. What each company can earn several years from now matters more than its current price.

Image source: Getty Images.

Netflix: cheaper, and still slow

Netflix’s growth has been slowing all year. Revenue grew 17.6% year-over-year in the fourth quarter of 2025, then fell to 16.2% in the first quarter of 2026 and 13.4% and 11.8% in the following two quarters. And management’s forecast calls for 11.5% growth in the fourth quarter.

Of course, income continues to rise. Management projects the company’s operating margin will increase to 31.5% this year, up from 29.5% in 2025. And the streamer spent a record $4.8 billion on buybacks in the third quarter.

However, margin gains may become more difficult to achieve when sales growth continues to slow. Investors are likely paying less for each dollar of Netflix’s profits because it’s not yet clear where its growth will stop.

A cheap price-to-earnings ratio for a slowing company is not the same as a good deal.

The sustainability of Apple

Apple is growing rapidly. Revenue climbed 16% year over year in the first fiscal quarter of 2026 (period ended December 27, 2025), then accelerated to 17% in the second fiscal quarter before landing at 16% in the third fiscal quarter.

But a slowdown is coming. For the fiscal fourth quarter, management expects growth of just 9 to 11 percent, citing currency and tight supplies of advanced chips in its devices.

However, for that premium, Apple investors get things that Netflix can’t offer.

Apple’s installed base now exceeds 2.5 billion active devices, showing how fragile the business is. Its services business, which sells subscriptions and more to these users, hit a record $30.7 billion in fiscal third-quarter revenue in June, up 12% year over year.

Services also has much higher margins than hardware: They accounted for about 28% of Apple’s third-quarter revenue, but about 42% of its gross profit.

Additionally, Apple continues to return cash to shareholders. In the first three quarters of fiscal 2026, it spent about $62 billion on buybacks and about $12 billion on dividends. Operating cash flow increased 43% during this period, to approximately $117 billion.

Apple has much more to sell

Apple has barely started charging for artificial intelligence (AI). Its new Siri AI assistant began rolling out in beta on September 14, and management has hinted at how it could make money from heavy users.

“We’ll have some sort of upgrade options on iCloud+ where people can buy the stack on iCloud+,” then-CEO Tim Cook said during the company’s third-quarter earnings call.

With more than 2.5 billion devices in use, even a small share of owners paying for additional AI features could add up.

AI could also allow Apple to sell new devices. HomeView, a 7-inch home device built around Siri AI, will be released on November 13. And Apple reportedly plans to ship its first smart glasses at the end of 2027.

There is also the iPhone Duo. Apple’s first foldable went on sale on October 23 starting at $1,999, which is $700 more than the iPhone 18 Pro Max. That adds another level to Apple’s most important product line, which generated $54.3 billion in revenue in the fiscal third quarter, up 22 percent.

Which one would I buy?

Netflix might still work fine. With a price-to-earnings ratio of around 17, Netflix doesn’t need much to do well. And Apple’s Nov. 2 report could be disappointing, given management’s cautious guidance.

But I prefer to pay for Apple. Its installed base and its service activity make it the more sustainable of the two. I also think that most of the benefits of AI for Apple are still ahead, both in features that people might pay for and in new devices like HomeView. The iPhone Duo, on the other hand, takes the iPhone to a more expensive high end.

Apple is the one I would buy. However, at a price-to-earnings ratio of around 37, I would probably build a position gradually.