Alphabet Inc (GOOG) Market Cap Surpasses Apple’s Despite 30% The Profitability


As you all have likely found out by now, Alphabet Inc (NASDAQ:GOOG) has just surpassed Apple (NASDAQ:AAPL) as the world’s most valuable company by market cap. As Apple’s stock has been declining, Alphabet Inc (NASDAQ:GOOG) shares have been going in the opposite direction, especially after yesterday’s fourth quarter earnings report.

Alphabet Inc (NASDAQ:GOOG) now has a market cap of around $550 billion, while Apple’s (NASDAQ:AAPL) cap sits at $535 billion. By looking at these numbers you would think that Alphabet probably had around the same profitability as Apple did, and likely similar revenue figures as well, but this is far from the case. In fact Apple is earning more than three times the profits of Google each year and revenue is expected to come in at around $86 billion for Alphabet this year, while analysts expect Apple to report nearly three times that figure at $229 billion.

So what’s up? Does Google’s growth make the company’s earnings worth three times that of Apple’s? IPhone growth has slowed, but this was an ‘s” year for device. When the iPhone 7 is released later this year, growth should continue in Apple’s smartphone division, while at the same time a new TV service, revamped watch and new iPad should push revenue and earnings even higher. Alphabet is a very exciting company with a lot of growth possibilities, but Apple is being treated as a company whose profits are declining 10% per year. The market seems a bit confused in our opinion.

The stock closed at $752 during the last trading session. It is up 41.44% since June 26, 2015 and is uptrending. It has outperformed the S&P500 by 50.30%.

From a total of 28 analysts covering Google Inc. (NASDAQ:GOOG) stock, 24 rate it a “Buy”, 0 a “Sell”, and 4 a “Hold”. This means that 86% of the ratings are positive. The highest target price is $900 while the lowest target price is $700. The mean of all analyst targets is $826 which is 9.84% above today’s ($752) stock price. Google Inc. was the topic of 38 analyst reports since July 21, 2015 according to the firm StockzIntelligence Inc. Pacific Crest maintained shares on December 21 with a “Overweight” rating. Pivotal Research maintained shares with a”Hold” rating and a $740 target share price in their report from an October 23. UBS maintained GOOG stock in a recent report from October 23 with a “Buy” rating. Credit Suisse maintained the rating on October 23. Credit Suisse has a “Outperform” rating and a $850 price target on shares. Finally, Needham maintained the stock with a “Buy” rating in a report they issued on an October 23.

The institutional sentiment decreased to 0.67 in Q2 2015. It’s down 0.53, from 1.2 in 2015Q2. The ratio dived, as 445 funds sold all their Alphabet Inc shares they owned while 412 reduced their positions. 109 funds bought stakes while 464 increased their total positions. Institutions now own 203.36 million shares which is 12.54% less than the previous share count of 232.53 million in 2015Q2.

Ancient Art L.P. holds 22.07% of its total portfolio in Alphabet Inc, equating to 213,887 shares. Jgp Global Gestao De Recursos Ltda. owns 38,052 shares representing 12.71% of their total US portfolio. Moreover, Cantillon Capital Management Llc has 11.84% of their total portfolio invested in the company, equating to 888,378 shares. The California-based Dalal Street Llc has a total of 11.16% of their portfolio invested in the stock. Glade Brook Capital Partners Llc, a Connecticut-based fund reported 50,799 shares owned.

Since February 25, 2015, the stock had 0 buys, and 30 insider sales for a total of $391.26 million in net activity. Brin Sergey sold 16,670 shares worth $10.24 million. Page Lawrence sold 16,670 shares worth $10.34M. Doerr L John sold 5,269 shares worth $3.33 million. Drummond David C sold 5,290 shares worth $3.39M. The insider Mather Ann sold 6,000 shares worth $3.48M.

Alphabet Inc is a collection of Companies. The company has a market cap of $523.59 billion. The Company’s collection include Calico, Google’s health and longevity effort; Nest its connected home business; Fiber, its gigabit internet arm; and its investment divisions such as Google Ventures and Google Capital, and incubator projects, such as Google X. It has 35.37 P/E ratio. These will be managed separately in Alphabet.