If
it happens, Alphabet will move to the head of the class just five
months after Google reorganized itself under the holding company.
The
Silicon Valley rivals could trade places soon, given how rapidly the
financial gap between them is narrowing. At the end of trading on
Friday, Apple's market value stood at $540 billion; Alphabet was worth
$524 billion.
That's
a dramatic swing from where things stood just 13 months ago. Apple then
boasted a market value of $643 billion, almost twice Google Inc.'s $361
billion.
Since
then, investors have soured on Apple Inc. The company has struggled to
come up with another trend-setting product amid slumping sales of its
most important device — the nearly 9-year-old iPhone, which accounts for
roughly two-thirds of Apple's overall sales.
Apple
has already acknowledged the iPhone will begin this year with its first
quarterly sales decline since it debuted in 2007. The slowdown helped
push down Apple's stock price by 12 percent since the end of 2014.
In
contrast, Google has maintained its leadership in the lucrative
Internet search and ad market while building other popular products in
video, mobile, web browsing, email and mapping. That bundle of Google
services brings in most of Alphabet's revenue, and is expected to
deliver growth in the 15 percent to 20 percent range as marketers shift
even more of their budgets to digital services.
Alphabet
also has impressed investors by reining in its spending. Google hired a
Wall Street veteran, Ruth Porat, as its chief financial officer last
May.
In
addition to reversing a long expansion of Google's operating expenses,
Porat also persuaded Alphabet's board to spend $5 billion buying back
its own stock. That move signaled a more shareholder-friendly approach
to managing the company's cash hoard.
Investors
also have applauded the creation of Alphabet, which is structured to
provide more information about the cost of the company's experimental
ventures into self-driving cars, Internet access services, health
science and city management.
All of those factors have helped lift Alphabet's stock — previously Google's — by 43 percent since the end of 2014.
It's
a potentially big shift for Apple, which has held bragging rights as
the world's most valuable company for most of the past four-and-a-half
years. (ExxonMobil seized the high ground for a brief time in 2013.)
Alphabet would become the 12th company to rise to the most valuable spot, according to Standard & Poor's.
BGP
Financial analyst Colin Gillis believes the potential changing of the
guard reflects a wider recognition that Alphabet is fostering a "culture
of innovation" while Apple has lost some of its magic since the October
2011 death of co-founder and former CEO Steve Jobs. "I no longer see a
sense of urgency at Apple," Gillis said.
Alphabet
could surpass Apple's market value early next week after it releases
fourth-quarter earnings on Monday. Investors expect a big quarter after
Google's closest competitor in digital ads, Facebook Inc., announced
that its revenue soared 52 percent in the period.
Of
course, Apple isn't just rolling over. It's reportedly working on new
products such as self-driving cars, virtual reality and Internet TV that
could conceivably re-ignite its revenue growth — as could any
resurgence in the iPhone itself. Alphabet has shown no signs of letting
up on Google's grip in Internet search or its expansion into other
markets.
Which
means we could see Apple and Alphabet continue to trade places in the
market-value rankings over the next few years, as both race to be the
first company worth $1 trillion.
By: Associated Press (San Francisco).
Review: Emerging Market Formulations & Research Unit, Flagship Records.
For The #FacebookTeam