For the first time in four years, Apple Inc. (NASDAQ: AAPL) is not the world’s most valuable company. Google’s parent company Alphabet (NASDAQ: GOOGL) has just beaten the Cupertino firm with a market cap worth $547.1 billion, while the iPhone maker is valued at $529.3 billion. These are the fourth-quarter earnings from 2015.
Apple had been the most valuable company since it took the title from Exxon Mobil in 2012. In early 2015, Tim Cook’s firm was valued at $760 billion.
Its ownership of YouTube added to the expansion in advertising and mobile search options have driven most of Alphabet’s stunning revenue growth in Q4, the company’s CFO Ruth Porat affirmed in a press release. Since March 2014, the number of YouTube viewers per day has increased by 40 percent. Advertising revenue at the site grew by 17 percent during 2015.
“We think the current re-rating in GOOGLE shares is two-thirds of the way complete and is likely to grind to $1000+,” Ross Sandler, a Deutsche Bank analyst, wrote in a client note.
Another aspect that has contributed with the strong revenue growth of the Mountain View-based firm is the fact that the number of Gmail users crossed the one-billion mark in the fourth quarter of 2015, said CEO Sundar Pichai.
Google established Alphabet as its parent company last October to separate its more profitable suite of products like YouTube from its riskier projects such as self-driving cars and the Project Loon internet balloon system.
That certainly was a clever move. The operating costs for Alphabet’s venturous bets increased from about $1.9 billion to an estimated of $3.6 billion for the twelve months of 2015, but its revenue only increased from $327,000 to $448,000. In comparison, the segment revenues for Google jumped from $65,674 to $74,541.
The last time Google beat Apple as the world’s most profitable company was in 2010. But the Cupertino firm managed to maintain its leading position for four years in a row given its ability to consistently come up with innovative features. However, it has not been enough to rely on the iPhone, which represents the core product that drives the bulk of its revenue, for such a long time. Morgan Stanley is predicting a six-percent drop in iPhone sales this year.
Apple’s stock has declined about 18 percent in 2015, but it still could drive sudden growth with the launch of the iPhone 7 in September, which means that it will not be easy for Alphabet to sustain the lead.
Source: BBC News