Best Stock to Buy Right Now: SiriusXM vs. Apple

Lots of stocks have seen their share prices rise quickly over the past few years, but two well-known stocks -- Apple (AAPL -0.19%) and SiriusXM (SIRI 1.16%) -- have unfortunately been laggards. Apple's stock is up 40%, and SiriusXM's stock is down about 60% over the past three years, compared to the S&P 500's gains of 60%.

Some investors have clearly lost faith in these companies, but if you were choosing between the two, which one is the better buy? Here's what's happening with the companies right now, and why Apple stock is most likely the better one to own.

SiriusXM's growth is seriously stalling

Things have not been going well for SiriusXM for a while, and the latest quarter continued that trend. For example, SiriusXM's earnings declined 23% to $0.57 per share in the second quarter (which ended June 30), and its sales fell nearly 2% to $2.1 billion.

One of the key problems for the company is its falling subscriber numbers. SiriusXM ended Q2 with 32.8 million subscribers, a decline of 1% year over year. The company generates about 75% of its total sales from subscriptions, and subscription revenue fell almost 2% in the quarter to $1.6 billion.

The decline in subscribers isn't as rapid as it has been in the past, but it's still a red flag for the company, especially as it faces continued pressure from podcasts and music streaming services.

Making matters worse for the company is that it's failing to tap into a massive advertising opportunity. Digital audio advertising will reach an estimated $7.5 billion in the U.S. this year, a nearly 20% increase from just three years ago. Yet SiriusXM's advertising sales are in decline, falling 2.5% in Q2.

Apple stock isn't rotten just yet

Apple stock has been a disappointment lately as the company has struggled to capitalize on the current AI boom. While some of its peers, including Microsoft, have made significant strides in AI services, Apple essentially fumbled its rollout of Apple Intelligence and has yet to deliver some of the promised services.

Apple could still get into the artificial intelligence race. CEO Tim Cook said on the company's third-quarter earnings call that Apple is open to potentially buying an AI company to catch up, even if it were a sizable purchase.

But despite Apple's current AI flub, there has been some good news for the company lately. Most importantly, Apple's revenue grew by 10% in Q3, marking its largest sales increase in four years. The increase was mostly due to rising iPhone sales, which rose 13% in the quarter.

Apple still makes the majority of its revenue from selling phones, but it's important to point out that the company now generates nearly 30% of its sales from its services, compared to 47% from iPhones. That revenue diversification is noteworthy because of the high profit margin Apple makes from services -- 74% -- compared to 37% for its products.

Unlike SiriusXM, Apple is very profitable. The company had $1.57 in non-GAAP earnings in Q3, an increase of 12% from the year-ago quarter.

Apple is the better stock

One thing investors should take note of is that Apple's stock isn't cheap. Its shares have a price-to-earnings (P/E) ratio of 35, which is more expensive than the S&P 500's average P/E ratio of about 30, and far pricier than SiriusXM's P/E ratio of just 7.

But considering that Apple is profitable, sales are increasing, and the company still has a lot of potential to tap into the AI market, its shares look like a far better buy right now than SiriusXM's stock.