Just caught something interesting about how one of the biggest names in tech investing is positioning himself right now. Peter Thiel, the Palantir founder and venture capital legend, apparently had his hedge fund dump positions in both Apple and Microsoft last quarter. And here's the thing - Wall Street analysts are saying both stocks are undervalued, which makes the move pretty intriguing to analyze.

Let me break down what's happening. Apple just crushed earnings with 16% revenue growth hitting $144 billion, iPhone sales especially strong in Greater China up 38%. Net income jumped 18% to $2.84 per share. The company's got 2.5 billion active devices, massive services business potential, and they're finally getting serious about AI through a partnership with Alphabet's Gemini models. On paper, this looks solid.

But here's why Peter Thiel likely exited: memory chip prices are climbing and eating into margins, plus Apple's trading at 34x earnings. That's expensive valuation territory when earnings are only projected to grow 11% annually. Among 52 analysts tracking the stock, the median price target sits at $303, implying 11% upside from current levels. Thiel's probably thinking why hold something expensive when better opportunities exist elsewhere.

Microsoft tells a different story though. Revenue up 17% to $81 billion, non-GAAP earnings jumped 24% to $4.14 per share. Their cloud business is crushing it, Azure keeps gaining share, and Copilot adoption is exploding - 160% more paid seats and tenfold growth in daily active users last quarter. Morgan Stanley's latest survey actually names Microsoft as most likely to capture cloud and AI market share over the next three years.

So why did Peter Thiel sell this one too? The narrative around AI disrupting software spooked a lot of investors. People worry Microsoft's massive AI investments won't generate reasonable returns. But I think that's missing the forest for the trees. Microsoft's software and cloud services are already woven into enterprise infrastructure worldwide. When AI becomes the defining technology of the next decades - and it almost certainly will - Microsoft's positioned to be a primary beneficiary. Plus the valuation's reasonable at 26x earnings with 15% projected annual growth through mid-2027.

The median analyst target on Microsoft is $600, suggesting 49% upside from current prices. That's meaningful potential. While Peter Thiel made his call for his fund, the setup here looks different from Apple. Microsoft's got the right exposure to the major trend that's reshaping everything, and the price doesn't look stretched for that opportunity. Worth paying attention to.