Two major events from tech giants Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) cause UBS analysts to chime in with their insights. One analyst believes software updates coming out of Apple’s developer conference represent a step in the right direction, while the other believes Microsoft’s acquisition of LinkedIn combine the strengths of each company.

Apple Inc.

Analyst Steve Milunovich of UBS shared his views on Apple after Day 2 of its annual developer conference, WWDC. While Milunovich states a lack of “earth shaking news”, the most notable take always from day 1 were platform enhancements and product improvements. The analyst cites an increase in the number of developers, 11 million to 13 million, as well as a $10 billion increase in payments to developers since January. Other notable announcements include improvements to the Apple Watch, added sign-on capabilities for tvOS and iOS, Apple Pay on web browsers, third party capabilities for Siri and iMessage, and improvements to the Home app.

The analyst points to two types of platforms utilized by Apple. Its primary platforms consist of operating systems such as iOs, macOS, tvOs, and Watch OS. Transaction platforms, those with direct monetization, include Apple Pay, Apple Music, and the App Store. Milunovich believes third party capabilities are an important milestone for the company. He explains that the ability of developers to write applications through an API “[enhances] the platform by leveraging innovation outside the company and [bolsters] the network effects that make platforms so powerful.”  He also points to the success of the app store in “balancing vertical product integration with more open horizontal platforms.”

Milunovich dives into more detail regarding the opening of Siri and iMessage to third party developers. The analyst believes this is an important step in regards to keeping up with the competition. He explains,

“There are machine learning and chatbot wars developing in which Apple is perceived to be lagging.” However, the analyst warns that chatbot capabilities could undermine Apple’s “interface advantage.” He also predicts a shift to cloud computing to keep up with AI. While third party iMessage capabilities enable users to order products, Milunovich notes that Siri is Apple’s “queen bot”, used as a differentiation point that “oversees requests and applications.”

The analyst reiterates his Buy rating on shares with a $115 price target.

According to TipRanks’ statistics, Steven Milunovich has a 45% success rate recommending stocks with an average return of 0.4% per recommendation. Out of all the analysts who have rated AAPL in last 3 months, 84% gave a Buy rating, 3% gave a Sell rating, and 13% remain neutral. The average 12-month price target for the stock is $124.87, marking a 28% upside from where shares last closed.

Microsoft Corporation

UBS analyst Brent Thill explains the advantages and disadvantages of the recently announced acquisition of LinkedIn by Microsoft. Earlier this week, Microsoft announced they would acquire LinkedIn for $196 per share, a 50% upside from Friday’s closing price. Thill believes the deal “makes strategic sense for Microsoft” as it aims to grow its application layer. Moreover, the acquisition supports and enhances Microsoft products such as Delve, Office 365, and Power BI.

The analyst states that although the transaction of the deal is valued at a hefty $26 billion, Microsoft generates “healthy” cash flow, highlighting the $25 billion FCF in FY 2016. Additionally, the company has over $100 billion in cash on the balance sheet. Microsoft believes the LNKD acquisition will result in an additional $115 TAM, on top of its $200 billion processing TAM. Despite solid financial backing, the analyst points to investor concern regarding the deal price relative to LinkedIn’s revenue. He explains, “We think investors are likely question this metric given MSFT’s $26Bn revenue in this segment vs. LNKD’s <$4Bn in 2016e rev.”

While the general market reaction to the deal was positive, the analyst warns of a few possible downfalls. First, the analyst notes that while this is MSFT’s biggest deal, is has previously failed with large M&A’s, pointing to failed acquisitions of aQuantive and Nokia. Second, the analyst worries that  the deal may “extend the risk” of LinkedIn’s declining revenue growth, pointing to a deceleration of 45% growth in FY14 to a 25% revenue growth estimate in 2016. Finally, Thill warns of a possible “culture clash” between LinkedIn’s younger image and a more “grown-up” Microsoft culture.

The analyst reiterates a Buy rating on the company with a $60 price target.

Brent Thill his ranked #73 out of 3,974 analysts on TipRanks. He has a 68% success rate recommending stocks with an average return of 11.2% per recommendation.Brent Thill Stats

According to TipRanks, out of all the analysts who have rated MSFT in the last 3 months, 71% gave a Buy rating, 8% gave a Sell rating, and 21% remain on the sidelines. The average 12-month price target for the stock is $58.37, marking a 17% upside from where shares last closed.