Why does Google's market value surpass Apple?

[Alphabet merges all of its businesses except the Google division into a so-called "OtherBets" business unit that reports results. Although businesses such as Nest, GoogleFiber, and GoogleX are losing money, Alphabet’s Google core businesses -- Search, Android, and YouTube perform well.

Apple’s world’s No. 1 market capitalization changed after Google’s parent company, Alphabet, announced its first earnings report.

Google's stock price soared, and the market value once surpassed Apple, becoming the highest-value technology company. According to the latest after-hours stock price, the search giant Google's current market value is approaching 565 billion US dollars, more than Apple's 539 billion US dollars.

If we pull the time back to a year ago, Apple’s market value once exceeded $700 billion, almost twice the market value of Google at the time. What happened to the two technology giants in a year?

"Crazy" project lost $3.6 billion

This is the first full financial quarter after Google announced its restructuring.

On August 11, last year, Google co-founder and CEO Larry Page announced the company's restructuring news on the official blog. He will start a new holding company, Alphabet, with Google co-founder Sergey Brin, who will serve as CEO and president respectively.

Alphabet replaces Google's listing on NASDAQ, and all of Google's current shares will be automatically converted into equal shares of equity shares.

This means that the original Google will only retain part of its core business, slimming into a wholly-owned subsidiary, New Google, while other leading-edge projects such as LifeSciences (developing smart contact lenses) and Calico (focusing on longevity technology) will be split. Become an independent subsidiary and form the Alphabet Group together with the subsidiary New Google.

In the earnings report, Alphabet merged all its businesses except the Google division into a so-called "OtherBets" business unit to report performance. It can be seen that despite the loss of businesses such as Nest, GoogleFiber and GoogleX, Alphabet's Google core businesses -- Search, Android and YouTube - performed well.

According to the report, Alphabet's total revenue for the fourth quarter was US$21.329 billion, an increase of 18% from US$18.103 billion in the same period of the previous year. The impact of exchange rate fluctuations was 24% year-on-year; it was not in accordance with US GAAP, Alphabet IV. Net profit for the quarter was $6.043 billion, compared to $4.654 billion for the same period last year.

For the entire fiscal year ended December 31, Google’s revenue was $74.541 billion, up from $56.674 billion in fiscal 2014; Google’s operating profit for fiscal year 2015 was $23.425 billion, up from $19.011 billion in fiscal 2014. Dollar.

The OtherBets division's fiscal year 2015 revenue was $448 million, up from $327 million in fiscal 2014; OtherBets' operating loss for the fiscal year 2015 was $3.567 billion, compared with an operating loss of $1.942 billion in the previous fiscal year. Excluding share-based compensation expenses, OtherBets' operating loss for the fiscal year 2015 was $3,069 million, compared to an operating loss of $1.595 billion in fiscal 2014. OtherBets' FY15 equity awards were $498 million, compared to $347 million in fiscal 2014.

Beyond Apple

If the time was pulled back more than a year ago, Apple’s market value once exceeded $700 billion, which was almost twice the market value of Google at the time.

In the past year, Apple has hit a record high in performance, but it has not been able to dispel the fear of the follow-up of Apple's follow-up innovative products. In the past six months, Apple's share price has fallen by nearly 20%.

Apple’s latest earnings report for the first quarter of fiscal 2016 has exacerbated this concern. The financial report showed that although revenue and net profit hit another record high, iPhone sales increased by only 0.4%, the lowest since its launch in 2007.

When Cook admits that Apple will face the first decline in sales in history, almost everyone's eyes are focused on how much creativity and imagination the company has.

"Apple's competitive environment has changed." Ai Media Consulting CEO Zhang Yi told the "First Financial Daily" reporter that whether they are Google or Amazon, they are not willing to let Apple stay at the peak for a long time. One feeling that is giving people now is that Cook is spending more energy on using operations to increase sales of Apple products, but at the end of product innovation, the company is not capable of continuing its past glory.

In contrast, Google's stable earnings report reflects Google's ability to strike a balance between business pressure and dreaming, and eases investor concerns about the company's investment in "crazy" projects.


Some analysts believe that the rise in Alphabet's share price includes revenue growth, gradual control of various expenses, and more financial self-discipline. Moreover, Google began to stimulate the stock price through the stock repurchase program, thereby making economic returns to shareholders.

Previously, one of the reasons for Google’s restructuring was to respond to Wall Street’s criticism that the company is not focused on opaque, such as investing in health, longevity, and automotive, providing operational data for its subsidiaries; in addition, restructuring is also aimed at reducing the negative impact of the main business outside of Google, such as automobiles. The loss caused by the business.

"As long as the core business is still operating steadily and revenue growth is steady, the investment of these companies can continue," said JMP Securities analyst Ronald Josey.

Despite the huge investment and the inability to see the future, the project will still drag down the overall performance of the new group of companies, but Page hopes to further promote technology-driven change and innovation. In his words: "We have always believed that as time goes on, companies will become more disciplined, safe and secure, and only make some adjustments. But in the technology industry, revolutionary and disruptive innovations continue to push the next huge In the growth area, you need to have some restlessness in order to keep up with the industry.