Fintech Investments

Will Alphabet Dethrone Apple As The World’s Most Valuable Company?

The closeout of 2015 has been a very good time to be Alphabet/Google. Google finished the day yesterday (Dec. 28) with both classes of parent company Alphabet closing at record-high prices.

Class A shares (designated GOOGL) picked up 1.5 percent on the whole to close the day at $793.96 (the highest point the stock reached during the day was $798.69); Class C shares (designated GOOG) were up 1.9 percent to $776.70 after an intraday top of $779.98. Both share classes passed record price benchmarks set on Dec. 1, 2015.

The recent surge is consistent with Google’s latter 2015 pattern, according to MarketWatch reports. Alphabet/Google’s benchmark was reset in July when the firm added $67 billion to its market cap in a single day on a strong earnings report. It has further endeared itself to the Street with the Google-Alphabet split and the hire of former Morgan Stanley CFO Ruth Porat.

MarketWatch further reports that Alphabet is an attractive target for investors looking to get maximum mileage out of their dollars, as the new organizational structure seems particularly given to big acquisitions and partnerships.

All in, Alphabet’s stock price has increased by 45 percent in 2015 — news that has gotten a lot of airplay on its own and also in conjunction with Amazon, the other tech giant that has seen amazing growth in its share price in 2015 (up 125 percent as of Dec. 30).

But what has attracted less notice so far is the change that seems to be on the verge of occurring, as it seems Google is getting extremely close to passing Apple as the most valuable company (by market cap) on the planet.

Apple’s market capitalization was in the $800 billion neighborhood on the front end of 2015 and, for a time, was drawing forecasts that it would be the first firm in history to hit a market cap of $1 trillion. But the back end of 2015 has not been so kind to Apple, as investors have become increasingly concerned that Apple and the iPhone are history’s most successful one-trick pony.

An extremely valuable one-trick pony. Apple’s market cap is still $602 billion, meaning that despite the hit it has taken over the last six months, it is still the most valuable company on Earth.

But Google’s market cap, as of the writing of this story, is $520 billion, putting it within 10 percent of passing Apple. That means if any one of the following three things happens…

  1. Apple’s value declines 10 percent, and Alphabet/Google’s remains unchanged
  2. Alphabet/Google’s value increases 10 percent, and Apple’s value remains unchanged
  3. Apple’s value declines 5 percent, and Alphabet/Google’s value increases by 5 percent

…then Alphabet/Google will be the most valuable firm on Earth and Apple will have to hand over its crown and settle for second best.

Given that the investing year is almost entirely over, it is almost impossible such a change will occur in 2015, unless something shocking happens.

But once 2016 rolls around, well, Apple better hope that the watch is a much bigger hit than expected or that Google doesn’t announce a self-driving car partnership with Ford.


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