On the surface, this probably seems like an entirely crazy comparison. Microsoft Corporation (NASDAQ:MSFT) continues to evolve into a leader in the cloud while AT&T Inc. (NYSE:T) is in the middle of a merger that could make it the most vertically integrated company in the history of media.

Source: Shutterstock

MSFT stock is trading at 52-week and five-year highs. AT&T stock isn’t doing as well, trading 12% off its 52-week high of $43.89; down 8.5% year to date and well below Microsoft stock, which is up 14.6%.

Microsoft’s margins are also much better than AT&T’s, and while margins aren’t everything, they’re a key piece of the puzzle when it comes to business sustainability.

The MSFT Stock Transformation

I’m a fan of what Microsoft CEO Satya Nadella has done to transform the company. No, it’s not all the way there, but it’s a heck of a lot more competitive today than it was in early 2014 when ValueAct forced its way on to the company’s board after making a compelling presentation on how to fix what ailed it.

ValueAct wanted change at the top, prompting former CEO Steve Ballmer to step down and Nadella to step up. The rest, as they say, is history.

In late December I suggested that MSFT stock was going to $80 by the end of 2017. Well, I didn’t actually say it, Piper Jaffrey analyst Alex Zukin did when he initiated coverage of Microsoft with an “overweight” rating and a 12-month price target of $80.

At the time it was trading at $63. Almost halfway through 2017, it’s about 44% of the way to its target.

InvestorPlace contributor Richard Saintvilus also thinks it can get to $80 and beyond within the next 12-18 months. Much of that growth is tied to the cloud and some of the new products attached to Windows 10.

“Investors who are looking for a potential breakout candidate that offers a combination of revenue growth and a solid dividend should look no further than Microsoft,” Saintvilus wrote May 28. “With some $121 billion in cash on the balance sheet, MSFT stock is not only safe but also on the verge of strong growth driven by the investments Microsoft is making in its ecosystem.”

Microsoft shareholders can thank Nadella, who’s changed the company’s mindset in three short years.

The Big Difference Between MSFT and T

Recently, I did a quick calculation of AT&T’s dividends paid, shares issued and repurchased, and debt issued and repaid over the last five fiscal years.

The company had cumulative free cash flow of $76.3 billion. From that, it paid out $51.5 billion in dividends, made net repurchases (repurchased less issued) of $27.3 billion and net debt issued of $42.7 billion (debt issued less repaid) for a deficit of $45.2 billion.

This deficit was my entire argument against owning its stock, especially since it was going to add so much more buying Time Warner Inc (NYSE:TWX).

So, what’s good for the goose is also good for the gander. Huh? I’m saying let’s do the same with Microsoft and see what we get.

Microsoft Capital Allocation 2012-2016

Source: Morningstar.com five-Year Financials

Note: Net Share Repurchases defined as stock repurchased less stock issued.

Net Debt Issued/Repaid defined as debt issued less debt repaid.

For starters, Microsoft’s five-year number is positive at $13.7 billion, $58.9 billion higher than AT&T. That’s going to change when it reports its fiscal 2017 numbers in July due to the debt it incurred to buy LinkedIn, but its deficit will still be much lower than AT&T’s who still have to get approval for its transaction.

And there’s another big difference between the two companies: cash on hand. Microsoft had $126 billion at the end of March compared to $14.9 billion for AT&T.

Bottom Line Microsoft vs. AT&T Stock

There’s no comparison. It’s not even close. With Microsoft, you get a company on the rise. With AT&T, who knows what you get.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.