Microsoft Vs. Google: Which Stock Will Cross the $4 Trillion Milestone First?

According to the Wall Street Journal’s consensus, analysts heavily favor Microsoft (NASDAQ:MSFT) over Alphabet (NASDAQ:GOOGL). While GOOGL’s average price target from its current price represents only 9% growth, from $311.36 to $334.69 per share, MSFT’s expected rise is nearly 30%, from the current $484.92 to the average target of $630.33 per share.

Recently, Dan Ives of Wedbush Securities reiterated Microsoft’s outperform rating, maintaining a $625 price target based on the company’s deployment of AI owing to its partnership with OpenAI. However, during December, the AI narrative has shifted significantly in Alphabet’s favor, as Gemini spearheaded AI benchmark tests and rose to the top.

At present, Alphabet holds a $3.75 trillion market cap, above Microsoft’s $3.60 trillion. Which company is the most likely to reach the $4 trillion milestone?

First, let’s examine the emerging narrative unfavorable for Microsoft’s growth prospects.

Microsoft’s Windows 11 Concerns Put into Context

Microsoft built its empire primarily on the Windows operating system, which became people’s de facto interface with personal computers (PCs). According to Statcounter, Windows OS still dominates the world’s desktop ecosystem at nearly 70% market share, against Apple’s 13.1% and Linux’ 3%.

However, Microsoft is absent from the mobile OS market, with Google’s Android holding nearly 72% dominance against Apple’s iOS at 27.64%. Mid-October, Microsoft entered a pivotal milestone by ending its support for Windows 10, holding 42.62% of worldwide Windows desktop versions as of November 2025.

If anything, Windows 11’s market share took a hit, going down from 55.18% in October to 53.7% in November. No shortage of social media content gives the impression that Microsoft is in trouble with the Windows 11 deployment. Specifically, it is gaining the reputation of not being a neutral OS, but one that is a platform for monetization and a launchpad for an agentic OS with features like Copilot and Recall.

Even Dave Plummer, a retired Microsoft Windows engineer, outlined which moves the company would have to undertake to correct Windows 11’s floundering reputation. Another concern is that Valve’s Steam, the world’s largest gaming distribution platform, could seize this opportunity to popularize the Linux OS family. Specifically, SteamOS with the newly announced Steam Machine and Steam Frame (VR) for early 2026 launch.

Nonetheless, the social media narrative is at odds with Microsoft’s fundamentals. The Windows 11 market dip is likely an artifact of secondary device retention than active abandonment. Namely, as millions of PCs are delegated to secondary roles, such as kitchen PCs or kids’ homework stations, they remain in the active user count. This has the effect of diluting the Windows 11 share.

More importantly, enterprise adoption demands AI agentic features. This is evidenced by Microsoft’s Intelligent Cloud growth of 28% in latest Q1 FY26 earnings (calendar Q3’25) to $30.9 billion. Likewise, Microsoft 365 Commercial cloud grew 17% YoY to $33 billion, as Windows 11 successfully serves as a vehicle for Microsoft 365 and Copilot subscriptions.

Overall, Microsoft Cloud grew 26% YoY to a revenue of $49.1 million. Although not as impressive, even the company’s personal computing division grew 4% to $13.8 billion.

As for the potential Linux threat, it is barely of concern with its global market share ceiling of 3-4%. Even if Valve’s upcoming launch is wildly successful, potentially selling 10 million units, it would represent a rounding error compared to over 1.5 billion Windows devices in use, primarily through large PC vendors like Dell.

The Real Battleground: AI Stack

In addition to the inertia of scale favoring Microsoft, the pain of learning a new operating system, such as Linux distros, is exceedingly unlikely to outweigh the pain of remaining on Windows 11. Rather, the real threat is coming from Alphabet’s growing AI-powered productivity suite.

For both companies, the AI-driven ecosystem is their fastest-growing revenue engine. Ending October, in Q3 earnings, Google Cloud’s (GCP) revenue grew 34% to $15.2 billion, against the aforementioned 28% growth at $30.9 billion from Microsoft. In terms of global cloud market shares, this puts Microsoft (Azure) behind Amazon at 20%, while Alphabet’s GCP occupies the distant 3rd place at 13%.

There are several paths Alphabet is pursuing to close that gap:

• Pushing Gemini as the most cost-efficient multi-modal AI model.
• Making major deals with competitors, such as with Amazon-backed Anthropic (Claude AI family).
• Making GCP the preferred platform for AI developers and startups powered by Agent Development Kit (ADK) and Vertex platform.
• Leveraging its proprietary Tensor Processing Units (TPUs) for AI workloads and inference, going directly against Nvidia’s monopoly.

However, even if Alphabet gains ground with its AI stack, it would still be problematic to convert free users from Google Workspace (Docs, Gmail, Meet) and gain enterprise traction. This is what makes Microsoft so entrenched and difficult to overcome.

Microsoft’s suite of productivity tools – Word, Excel, PowerPoint – are the de facto tools in large corporations and governments. The switching cost between ecosystems would not only be a financial burden but also hugely disruptive for daily operations. Moreover, by having a paid add-on such as Copilot, Microsoft gains massive, incremental revenue stream by leveraging this entrenched user base.

Although Microsoft’s gross margin percentage (69%) slightly decreased in the latest Q3 earnings, this was largely due to AI-related capital expenditures (capex), positioning the company for greater Azure growth. Case in point, Microsoft’s commercial bookings increased 112% YoY in that quarter, with commercial remaining performance obligations (RPO) accounting for $392 billion, up 51% YoY.

The Bottom Line

Year-to-date, GOOGL stock significantly outpaced MSFT, at 63% vs 16% respectively. Clearly, investors are willing to pay a premium for the company’s full-stack control over its cloud infrastructure, as Gemini challenges AI bubble concerns.

Likewise, Alphabet’s ecosystem of apps is ripe for further integration. Even Waymo is positioning itself as the Android of the robotaxi economy, although with less long-term potential than Tesla. For these reasons, Alphabet may very well be the first to cross the $4 trillion market cap milestone.

Nonetheless, Microsoft’s structural enterprise lock-in and high-certainty revenue from its AI-powered productivity suite is likely to make it the more reliable long-term winner for the $5 trillion race and beyond. In the end, investors should consider both exposures as Microsoft and Alphabet represent a centralized control over the digital landscape. This is a highly precious commodity that Palantir (NASDAQ:PLTR) also seeks to offer through its specialized data-focused AI platforms, but across a smaller high-security niche.

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