The quote is from the chapter on Demosthenes on Lives of the Ten Orators, by Pseudo-Plutarch:
γενόμενος δὲ καὶ ἐν τῇ Ὀλυμπιακῇ πανηγύρει καὶ ἀκούσας Λαμάχου τοῦ Τερειναίου Φιλίππου καὶ Ἀλεξάνδρου ἐγκώμιον ἀναγινώσκοντος Θηβαίων δὲ καὶ Ὀλυνθίων κατατρέχοντος, παραναστὰς ἀρχαίων ποιητῶν μαρτυρίας προηνέγκατο περὶ τῶν Θηβαίοις καὶ Ὀλυνθίοις καλῶς πραχθέντων, ὡς παύσασθαί τε τὸ λοιπὸν τὸν Λάμαχον καὶ φυγεῖν ἐκ τῆς πανηγύρεως Φίλιππον δὲ πρὸς τοὺς ἀναφέροντας αὐτῷ τὰς κατ᾽ αὐτοῦ δημηγορίας εἰπεῖν ὅτι ‘καὶ αὐτὸς ἂν ἀκούων λέγοντος Δημοσθένους ἐχειροτόνησα τὸν ἄνδρα πρὸς τὸν κατ᾽ ἐμοῦ πόλεμον’ ἐκάλει δὲ τοὺς μὲν αὐτοῦ λόγους ὁμοίους τοῖς στρατιώταις διὰ τὴν πολεμικὴν δύναμιν, τοὺς δ᾽ Ἰσοκράτους τοῖς ἀθληταῖς: τέρψιν γὰρ παρέχειν αὐτοὺς θεατρικήν.
Translation, from project Perseus:
Being on a time present at the Olympic games, and hearing Lamachus the Myrrhinaean sound the praises of Philip and of Alexander the Great, his son, and decry the cowardice of the Thebans and Olynthians, he stood up in their defence against him, and from the ancient poets he proclaimed the great and noble achievements of the Thebans and Olynthians; and so elegantly he behaved himself in this affair, that he at once silenced Lamachus, and made him convey himself immediately out of the assembly. And even Philip himself, when he had heard what harangues he made against him, replied, that if he had heard him, he should have chosen him general in the war against himself. He was used to compare Demosthenes's orations to soldiers, for the force they carried along with them; but the orations of Isocrates to fencers, because of the theatrical delight that accompanied them.