Apple Inc. valuation now more than $134 billion greater than Alphabet's Google

Posted:
in AAPL Investors edited February 25
Shares of Apple are collectively worth $713.96 billion as of today's market close, while the market cap of Alphabet Inc (which includes Google) closed today at $579.15 billion, a difference of $134.81 billion. However, Google's search results still point to year-old stories touting Google briefly surpassing Apple in market cap twice last spring.


Google's old results haven't been accurate for months


If you search Google for "apple google valuation," the search giant's primary "featured snippet" answer is supplied from a year old Quartz blog entry by Melvin Backman, who portrayed the event (last February 1) as the "New Normal," rather than a passing moment of irrationality in the market. Apple passed up again Google within a couple weeks of that being written.

If you click Google's suggested "People Also Ask" question for "Is Google or Apple worth more?" the answer it gives is derived from an article published by CNBC last May, when Google shares again briefly passed Apple's. However, for most of the past year since, Apple's market cap has hovered about $40 billion on top of Google.


Apple valuation up, P/E still very low

This month, Apple's shares jumped significantly following its earnings report from the December quarter, boosted by strong sales of iPhones and Macs, as well as the 18 percent growth of its Services business that's now achieving quarterly revenues of $7.17 billion.

The tech media narrative from last year that decried a shrinking smartphone market and imagined a "boring iPhone 7" helped to suppress Apple's stock price, but that story couldn't withstand the real sales numbers achieved at the release of new iPhones and MacBook Pros, as well as record sales of Apple Watch and Services including App Store sales and Apple Music.

Despite the increase in Apple's share price, the company still trades at a Price/Earnings ratio of 16.36, far lower than Google's 29.32. In other words, the market is still putting a much larger valuation on Google's ability to make money than Apple's, despite the fact that Apple continues to earn more money and successfully launch products that Google continues to fail at.

That's particularly visible in smartphones with the Google Pixel, which did little for Google nor its hardware partner HTC. But Google has also stumbled in wearables, tablets and laptops, indicating an strong inability to take Apple's business away at will, despite many years and trying many different strategies.

The massive over-valution of surveillance based advertising

Google's $26.06 billion in total revenues during the December quarter (and $5.5 billion in quarterly net income) were significantly lower than Apple's $78.35 billion in quarterly revenues (and $17.89 billion in net income).

However, more attention was directed to the idea that Apple earns most of its profits from a single family of products (iPhones) than the fact that virtually all of Google's profits come from surveillance based advertising. That's a market that is not only facing strong competition from players including Facebook, but is also at risk from ad blocking and a general user dissatisfaction with being tracked and sold to advertisers. Facebook's market cap ($389.23 billion) is almost half as large as Apple's despite achieving quarterly revenues that are close to a tenth of Apple's ($78.4 billion)

Apple's $7.17 billion from its Services unit alone approaches the revenue of all of Facebook ($8.81 billion), but Facebook shares trade at a P/E of 38.99, meaning Facebook's market cap ($389.23 billion) is almost half as large as Apple's despite achieving quarterly revenues that are close to a tenth of Apple's ($78.4 billion).

Like Google, Facebook also has a business model that depends almost entirely upon ads, and that faces real competition from both the incumbent Google and encroaching new players including Snap. Unlike Apple, Facebook and Google have no entry into the Chinese market, and little potential to enter it.

Apple's luxury electronics and proprietary app development platforms are unrivaled on a global level, and Apple is the only company with strong market share in both the U.S. and China, the world's two largest markets for smartphones and related products.
saguaro joe
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Comments

  • Reply 1 of 33
    irelandireland Posts: 16,463member
    Are we really doing this? Nah nah-nah nah-nah nah.
    edited February 24 kudu
  • Reply 2 of 33
    sflocalsflocal Posts: 3,612member
    All this shows is that Google (or ABC) is ridiculously overpriced.
    DanielEranwatto_cobrarezwitspscooter63andrewj5790cornchip
  • Reply 3 of 33
    Both Google and Facebook are significantly over valued advertising companies - both haven't achieved more than shamelessly duplicate the functionality of their competitors in an effort to shore up their advertising revenue. Their other endeavours are both financially and proportionally (obviously) failures, and are frequently discontinued before reaching any significant milestone. They operate like rocking horses, constantly moving, but never actually getting anywhere.

    Yet reporters jump on the Apple Watch because it hasn't magically matched iPhone's sales and popularity.
    DanielEranwatto_cobrapscooter63charlesgresStrangeDayspatchythepirateadm1
  • Reply 4 of 33
    "However, more attention was directed to the idea that Apple earns most of its profits from a single family of products (iPhones) than the fact that virtually all of Google's profits come from surveillance based advertising. That's a market that is not only facing strong competition from players including Facebook, but is also at risk from ad blocking and a general user dissatisfaction with being tracked and sold to advertisers."

    I've been saying this for years. To expand, Apple makes most of its revenue by selling products people want (iPhones). Google makes most of its revenue off something people dislike (ads).

    That Google is rewarded for this is ming boggling.
    monstrositySoliwatto_cobrapscooter63calicharlesgrescornchipStrangeDaysnetmageadm1
  • Reply 6 of 33
    kenckenc Posts: 168member
    To be fair, when you back out cash and debt and look at Enterprise value, Google is a lot closer to Apple in value.
    techrulescornchip
  • Reply 7 of 33
    SoliSoli Posts: 2,568member
    kenc said:
    To be fair, when you back out cash and debt and look at Enterprise value, Google is a lot closer to Apple in value.
    What's the point?
    watto_cobratechrulesandrewj5790cornchipnetmage
  • Reply 8 of 33
    DCJ0001 said:
    I suspect there's little to no search engine optimization value in an article with the word "Alphabet" in it, versus "Google."
    edited February 24 watto_cobratechrulescornchip
  • Reply 9 of 33
    The market is chasing companies that they think can monetize services forever. Facebook is the biggest example in my opinion. If you asked someone to pay $1 a month for Facebook, there user base would most likely take a big hit. Google at least provides the best search engine in the world. I could not do my job without Google and the ability to find workarounds and troubleshooting. I sure as hell can live without Facebook (and do). I love when people talk about monetization of crapola like WhatsApp. Like somehow billions will be made on a second rate messaging platform selling ads.
    SpamSandwichwatto_cobragatorguycornchipStrangeDaysnetmage
  • Reply 10 of 33
    tjwolftjwolf Posts: 105member
    The 'P' in P/E ratio stands for 'P'rice not profit.  It's hard to take anything you wrote seriously when you can't get that basic fact straight.
    SpamSandwichSolicornchip
  • Reply 11 of 33
    Apple has a nice market cap lead... for now. However, I'm always seeing articles saying how much higher Alphabet will be going. It never seems to top out in value as far as Wall Street is concerned. I'm sure Wall Street is pegging Alphabet as the next trillion dollar market cap company. The big investors are always thinking some Alphabet moonshot project is going to rocket the stock way past Apple. It is kind of puzzling that nothing is slowing down Alphabet's ad revenue. I honestly thought all those ad blockers being used would somehow slow Alphabet's ad growth down a bit. It seems to be an unstoppable one-trick pony. Alphabet's one-trick pony definitely generates much more investor-pulling power than Apple's one-trick pony.

    Microsoft's Bing Search isn't doing spit to slow down Google Search and little is ever said about it. It's always nice to own stock in a company like Alphabet where they say they have absolutely no competition at all for a search engine whereas every time some new smartphone hits the market, they say that's some huge competition for Apple and Apple is doomed. I really get sick of hearing it but it won't ever stop. Apple should have at least acquired a search engine like DuckDuckGo just to break Alphabet's balls but I guess that won't ever happen. Alphabet gets a free ride and a nice fat P/E forever. I suspect Apple's P/E is definitely range-bound where Apple will need every ounce of revenue to move the stock even just a little bit.

    It's seems all a company has to do to boost its value is to get a nice following of people who keep pumping up the stock and that should easily lure investors into a company that supposedly has "no limits" on growth."
    edited February 24 watto_cobragatorguyMikeymike
  • Reply 12 of 33
    mpantonempantone Posts: 1,276member
    tjwolf said:
    The 'P' in P/E ratio stands for 'P'rice not profit.  It's hard to take anything you wrote seriously when you can't get that basic fact straight.
    I don't think most tech writers understand anything about the financial market which is why they write about the tech market and not the financial market. It seems like every three months they screw up the ex-dividend date and its implications, not having learned anything since the last screw-up they committed just three months prior.

    For that matter, I don't think most commenters have any idea about the financial market either. A.) you see insanely ridiculous proposals on how Apple should run their business and B.) there's a lot of basic misinterpretation of basic financial statistics. People who don't know the difference between revenue and profit. Stuff like that.

    Sorta dilutes the value of sites like AppleInsider, MacRumors, Cnet, Macworld, etc. if basic concepts aren't correctly represented. We're not talking controversial interpretations of some random rumor, just basic financial stats.
    edited February 25 pscooter63calixiamenbillStrangeDaysnetmagewatto_cobraSpamSandwich
  • Reply 13 of 33
    sflocal said:
    All this shows is that Google (or ABC) is ridiculously overpriced.
    I know this sounds a bit naive but: Here is the thing, I can't understand how some companies that are for the most part a Website or an App even, can be relatively around 1/2, 1/3, or even 1/10 of the valuation VS a company like Apple (or even Acer/Dell/IBM) that has actual physic product from Assembly Lines in people's hands or at a companies facilities. This whole "THEY CAN REACH BILLIONS of PEOPLE" is SO overrated.

    I understand if you throw some product in the faces of a billion people, sure you can charge someone a fee to do that, but I seriously think advertising is overrated, at least now days. Back in the beginning of "advertisements and mass marketing" sure it was HUGE. But I got news, less people just run out and buy a new car "On the Daily" because of some car ads.

    I mean get this, in the future, 100s if not 1000s of companies will have "A Billion clients". It might even get to the point where if you are just online you are a target/client.

    People goto search engines, YES like google, which is why they are worth some mulah, but the main thing is, nowadays WE GOTO FIND WHAT WE WANT, rather than have it LURED in our face. The only thing I have made a REFLEX purchase from is when the McPick two was at McDonalds and offered 2 QPs. I mean it's sick if you watch TV quite a bit, DVR or Not, we see 1000's of Ads THAT FAIL, and I take back what I said, one flavor of Advertising that does work, are Movie Trailer/Commercials. But in essence Advertising IS Overrated!
    watto_cobra
  • Reply 14 of 33
    dreyfus2dreyfus2 Posts: 1,047member
    The question I have is... Are these search results pointing at Google manipulating search? Or correctly reflecting the fact that Alphabet surpassing Apple in market cap was reported by just about every clickbait site in existence, and the opposite by virtually no one?
    andrewj5790netmagewatto_cobraSpamSandwich
  • Reply 15 of 33
    mpantonempantone Posts: 1,276member
    rezwits said:
    People goto search engines, YES like google, which is why they are worth some mulah, but the main thing is, nowadays WE GOTO FIND WHAT WE WANT, rather than have it LURED in our face. The only thing I have made a REFLEX purchase from is when the McPick two was at McDonalds and offered 2 QPs. I mean it's sick if you watch TV quite a bit, DVR or Not, we see 1000's of Ads THAT FAIL, and I take back what I said, one flavor of Advertising that does work, are Movie Trailer/Commercials. But in essence Advertising IS Overrated!
    Actually, there are a ton of people on this site who don't know how to use search engines. But not just this site, same with MacRumors, or a food site, or pretty much any site on the Internet.

    Wish it were different, but that's the way Internet denizens in 2017 behave.
    watto_cobra
  • Reply 16 of 33
    dreyfus2 said:
    The question I have is... Are these search results pointing at Google manipulating search? Or correctly reflecting the fact that Alphabet surpassing Apple in market cap was reported by just about every clickbait site in existence, and the opposite by virtually no one?
    Good question. Hadn't thought about it that way. 
    watto_cobraSpamSandwich
  • Reply 17 of 33
    dreyfus2 said:
    The question I have is... Are these search results pointing at Google manipulating search? Or correctly reflecting the fact that Alphabet surpassing Apple in market cap was reported by just about every clickbait site in existence, and the opposite by virtually no one?
    Search Engine Optimization (SEO) is an entire industry unto itself.  Goo-- I mean, DuckDuckGo it.
    edited February 25 rezwitswatto_cobraSpamSandwich
  • Reply 18 of 33
    smalmsmalm Posts: 609member
    However, Google's search results still point to year-old stories touting Google briefly surpassing Apple in market cap twice last spring.
    It's 'man bites dog' vs 'dog bites man'.
    netmagewatto_cobra
  • Reply 19 of 33
    Both are great American companies doing great things. Wouldn't want to live without either of them.
    Soli
  • Reply 20 of 33
    This is just a dumb article, with some dumb comments as well. These are both both great companies, with great stock potential. They are also very different companies, with different business models, different product offerings, but with some cross-over. These comparisons are largely irrelevant. Alphabet is held in larger amounts right now by the more successful growth funds, often second only to Amazon. Apple was much further down the list, rising recently with the stock's dramatic price appreciation pushing their value, and their share of the underlying fund holdings, with it.  (All while Google's price was trending water over near-term uncertainties.). Next year, these numbers and rankings could be reversed. Or the same. Or even more divergent.  It is the nature of the market. This "snapshot in time" stuff (by both companies) is just fodder for fanboys and haters to do battle.  Buy them both and as Cramer says, "never sell!"


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