Google Parent Alphabet Overtakes Apple in Market Cap

Alphabet, Google’s parent company, became yesterday the most valuable company in the world after Q4 2015 and total 2015 fiscal year results smashed expectations and sky-rocketed Alphabet past Apple’s stock.

Monday, Alphabet reported that its revenue rose 19% to $17.3 billion in its fourth quarter, beating analysts’ average estimates of $16.9 billion.

In opening trade following a robust earnings report, Alphabet shares rose 2.9 per cent to lift its market capitalisation to $543 billion while Apple’s value declined to $530 billion with a modest dip in trading.

The change may signal the passing of the technology baton to Alphabet – formerly known as Google – from Apple, which surged past Microsoft Corp in market value in 2010.

Wall Street has fretted for years about how much the core Google business was being used to fund founders Larry Page and Sergey Brin’s ambitions to grow new businesses in robots, self-driving cars and spaceships. The company’s Class C shares (GOOG) closed $752 a piece, up 1.22% and further increased more than 5% to $791 each after-hours. Well, for starters, these other bets generated $448 million in revenue in 2015 but Alphabet’s operating loss for those bets was nearly $3.6 billion.

Alphabet’s combined share classes were worth US$555 billion, compared with Apple, which had a value of about US$534 billion. “That’s going to build investors’ confidence about the other bets they’ve been making”.

Josh Olson, an analyst at Edward Jones & Co., said, “Alphabet’s core business looks very healthy”.

Google Chief Executive Sundar Pichai said on the call that its Gmail service crossed one billion monthly active users last quarter, joining Search, Android, Maps, Chrome, YouTube and Google Play in topping that mark.

Excluding one-time items, Google earned $8.67 per share.

The company also reported a 17.8% increase in quarterly revenue to $21.3bn – crediting strong advertising sales on mobile devices and YouTube.

Google announced in August that it was forming a parent company called Alphabet in a move to streamline its corporate structure, which had grown unwieldy and included disparate interests in Internet search, drones, investments, health care, wearables, online shopping, self-driving cars and more.