Alphabet, the parent company of Google, surpassed Apple to become the world’s most valuable company late last week. However, this wasn’t the first time this has happened.
The multinational tech conglomerate, often informally referred to as “Google,” now boasts a net worth of a whopping $498 billion, while Apple’s market value is around $495 billion. Alphabet surpassed Apple in net worth just three months ago, but their advantage didn’t last long, and Apple retook the lead in February. Now, the two largest tech giants in the world remain neck-and-neck.
It’s been a rough year so far for both companies when it comes to share prices. Alphabet shares were down 1 percent, and have fallen 7 percent overall so far in 2016. Apple is suffering even worse, with shares hitting their lowest value in two years, falling below $90 a share for a brief time. This news comes in the wake of Apple reporting its worst quarter in 13 years. Despite being the largest consumer electronics company in the world, Apple’s first quarter earnings for 2016 were down 14 percent from early 2015, sales of the iPhone declined for the first time since the signature smartphone’s debut in 2007, and sales for the iPad and Apple’s other signature electronics sank. Apple became the worst performer in the Dow Jones Industrial Average so far in 2016 according to Bloomberg.
“The decline in Apple, hovering at almost 6 percent, extended its loss since being added to the 120-year-old stock measure to 23 percent. That eclipses a 19 percent drop for American Express Co. since March 18, 2015.”
— CNBC Now (@CNBCnow) May 12, 2016
It can be difficult even for Wall Street analysts to interpret the sudden ups and downs of the two enterprises: are there specific products are policies that lead to one surging in front or behind the other? Which is the tortoise and which is the hare? The short answer is that Apple has been a lead innovator in technology and consumer electronics, while Google is the more tortoise-like character.
“In the big picture, Google is a slow-and-steady story,” Gene Munster, senior research analyst at asset management firm Piper Jaffray, said to The Street. “Search is a utility. We can’t live without it…and they’ll just power away all the profits of that into other bets. Eventually one of those other bets is going to hit big.”
Alphabet market cap briefly exceeds Apple, for the first time since… Feb. And before that 1 day, 2010. pic.twitter.com/MgzmXifYhl
— Magnus Vie Sundal (@MagnusVieSundal) May 12, 2016
While Apple’s troubles may be good news for Alphabet/Google, both report double-digit percent losses in the value of their shares, and investors for both companies have expressed anxiety that the behemoths may not be competitive enough with companies on the rise like Amazon and Facebook, according to CNN Money.
“Investors in both Apple and Alphabet are concerned that they are not doing enough to contend with more rapidly growing tech companies like Amazon (AMZN, Tech30) and Facebook (FB, Tech30). Amazon’s stock is up 6% this year while Facebook has gained nearly 15%. Both companies are trading near all-time highs and each now has a market value of about $340 billion. Both are now worth more than healthcare giant Johnson & Johnson (JNJ). And they are only worth slightly less than Exxon Mobil (XOM) and Warren Buffett’s Berkshire Hathaway (BRKB).”
If Amazon or Facebook end up passing Berkshire Hathaway and Exxon Mobil, then they would butt heads with Microsoft, currently rated by Forbes as the number three most valuable brand name in the world for 2016, right behind – you guessed it – Apple and Google. While it may be premature still to predict such a monumental change in the hierarchy of the world’s markets, Facebook and Amazon are both experiencing meteoric rises – a rise of 53 percent and 66 percent, respectively, over the past year.
If Google and Apple don’t start rolling out new products to wow Wall Street investors, not to mention consumers, soon they may have their titles as the world’s most valuable companies taken away.
[Photo by Justin Sullivan/Getty Images]