Disney (DIS Quick QuoteDIS - Free Report) and Apple (AAPL Quick QuoteAAPL - Free Report) represent two iconic American companies, trading as mega-cap stocks, that have expanded beyond their original domains into converging territory. Disney has evolved from pure entertainment into streaming technology and digital experiences, while Apple has extended its hardware dominance into services and content through Apple TV+.

The comparison between these media-tech giants becomes particularly relevant as both companies navigate similar challenges, including streaming competition, content investment demands, and shifting consumer preferences. Disney is executing a turnaround under CEO Bob Iger's leadership, focusing on streaming profitability and experiencing experiences. Apple continues leveraging its ecosystem strength while betting on AI integration through Apple Intelligence. Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for DIS Stock

Disney's investment thesis centers on its transformation from streaming losses to profitability, coupled with its resilient Experiences business and attractive valuation. The company achieved record segment operating income of $17.6 billion in fiscal 2025, up 12% from the prior year, demonstrating operational momentum despite industry headwinds. Most significantly, Disney's streaming business has completed a remarkable turnaround, reporting $1.33 billion in streaming operating income for fiscal 2025 after years of losses. The company's Direct-to-Consumer segment shows a strong trajectory with Disney+, adding 3.8 million subscribers in the fiscal fourth quarter to reach 132 million, while combined Disney+ and Hulu subscriptions totaled 196 million.

Disney's forward guidance signals accelerating growth potential. Management projects double-digit adjusted EPS growth for both fiscal 2026 and 2027, underpinned by streaming margin expansion and experienced business strength. For fiscal 2026, Disney forecasts an operating margin of 10% for Disney+ and Hulu, fueled by continued streaming growth and recent price hikes. The company plans strategic content investment of $24 billion in fiscal 2026, positioning for sustained subscriber growth while maintaining profitability discipline.

According to the Zacks Consensus Estimate, Disney’s earnings per share are projected at $6.59 for fiscal 2025 and $7.36 for fiscal 2026. 

The Experiences segment provides reliable cash generation and a growth runway. Disney's cruise business shows exceptional promise, with two new ships joining the fleet — Disney Destiny launching in November 2025 and Disney Adventure in March 2026, marking Disney's first ship homeported in Asia. Five additional cruise ships are scheduled beyond fiscal 2026, ensuring long-term growth drivers.

ESPN's strategic evolution strengthens Disney's competitive moat in sports content. The launch of ESPN Unlimited in August 2025 marks a significant direct-to-consumer push integrating fantasy sports and betting features. Disney's NFL partnership, granting the league a 10% equity stake in ESPN while expanding content rights, positions ESPN as the backbone of Disney's streaming ecosystem. Management expressed confidence about ESPN Unlimited's start, though specific subscriber metrics weren't disclosed.

However, Disney faces near-term challenges, including linear television decline and content execution risks. Linear Networks’ operating income declined due to ongoing cord-cutting trends, though streaming gains increasingly offset these pressures. The company also navigated a carriage dispute with YouTube TV that was resolved in November after Disney networks went dark for approximately two weeks. Theme park competition from Universal's Epic Universe requires Disney to maintain differentiation through quality experiences and IP strength. Despite these headwinds, Disney's diversified revenue streams, iconic franchises, and improving profitability trajectory position the company for sustained value creation.

The Case for AAPL Stock

Apple maintains its position as a technology powerhouse with unmatched ecosystem strength and financial performance. The company reported record fiscal 2025 revenues of $416 billion, with services reaching an all-time high of $28.8 billion in the fiscal fourth quarter, up 15% year over year. The services segment continues driving high-margin growth, providing recurring revenues that offset hardware cyclicality.

Apple's December quarter guidance signals strong momentum heading into fiscal 2026. Management forecasts revenue growth between 10% and 12% year over year for the holiday quarter, potentially reaching $138 billion at the midpoint, which would mark one of Apple's strongest periods. The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $8.16 per share, up 3.8% over the past 30 days, suggesting 9.38% growth from fiscal 2025’s reported figure. 

Apple’s latest iPhone 17 series is a hit in China, with October sales jumping 37% year over year per Counterpoint data. This China rebound addresses concerns about Apple's performance in a critical market facing competitive pressures from local manufacturers. (Read More: iPhone 17 Boosts Apple's China Sales: What's Ahead for the Stock?)

Apple Intelligence represents the company's strategic bet on AI integration across its ecosystem. The platform rolled out in stages throughout 2025, with Apple Intelligence integrated across more than 250 million devices by year-end 2025. Features including enhanced Siri capabilities, visual intelligence, and live translation aim to drive upgrade cycles and strengthen ecosystem lock-in. Management emphasized AI integration as central to future product development, though monetization pathways remain evolving. The installed base of active devices reached all-time highs across every product category, providing a foundation for services expansion and hardware upgrades.

Apple's capital allocation strategy reinforces shareholder returns. The company maintains aggressive share buyback programs while paying modest dividends, with approximately $1.04 per share in trailing annual dividends. Apple's announcement of $600 billion in U.S. investment over the next four years, including advanced AI service manufacturing, demonstrates a long-term commitment to technological leadership.

Nevertheless, Apple faces valuation questions and growth sustainability concerns. Regulatory risks persist, with ongoing DOJ antitrust litigation challenging Apple's app store policies and ecosystem restrictions. China exposure remains a double-edged sword — while recent iPhone 17 performance encourages optimism, geopolitical tensions and tariff concerns create volatility.

Valuation and Price Performance Comparison

The valuation differential between Disney and Apple presents stark contrasts. Disney's P/E ratio stands at 15.19, while Apple trades at 33.24 times earnings — nearly double Disney's multiple. Disney’s discounted valuation reflects market skepticism about media industry dynamics and Disney's ability to offset linear television declines, yet creates compelling upside potential if execution continues improving. Apple's premium valuation reflects its proven business model, superior margins, and ecosystem strength. However, the elevated multiple assumes successful AI monetization that remains largely prospective.

DIS vs. AAPL: P/E F12M Ratio

Image Source: Zacks Investment Research

Price performance divergence accentuates the opportunity gap. Disney stock has underperformed significantly, declining 8.5% year to date, creating what value-oriented investors view as an attractive entry point with catalysts aligning. Apple's steady 10.2% year-to-date gain has driven the stock near all-time highs, potentially limiting near-term upside absent exceptional results that exceed already optimistic expectations.

DIS Underperforms AAPL Year-to-date

Image Source: Zacks Investment Research

Conclusion

Disney presents a more compelling risk-reward proposition for investors seeking upside potential in late 2025. Disney's streaming turnaround from billions in losses to sustained profitability, combined with record experiences income and strategic ESPN positioning, demonstrates an operational transformation that markets have yet to fully recognize. The stock's recent underperformance and compressed valuation provide an attractive entry opportunity with multiple catalysts, including streaming margin expansion, experience capacity growth, and potential resolution of linear television headwinds. While Apple remains a quality company with formidable competitive advantages, its premium valuation and recent strong performance limit incremental upside potential. Investors should track Disney stock for attractive entry points to participate in the company's earnings acceleration, while those considering Apple may benefit from waiting for better valuation opportunities or short-term pullbacks that provide more favorable risk-reward dynamics. DIS and AAPL carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.