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In a latest development, Alphabet Inc has surpassed Apple Inc as the most valuable company in the United States. It has removed the iPhone maker from the top spot that it has held for the better part of four years.
The change may signal the passing of the technology baton to Alphabet which bypassed Microsoft Corp in market value in 2010. Microsoft in turn eclipsed International Business Machines Corp two decades ago.
It is not without piquancy for Apple and Alphabet, which worked hand-in-hand to develop mobile computing, but fell out bitterly after Google launched its own Android mobile operating system in 2008.
The two companies’ operating systems and apps are in direct competition with each other and Apple is still in litigation with Samsung Electronics.
The Internet powerhouse’s stock has surged in the last year, helped by increasing sales of advertising on mobile devices, while Apple has struggled due to signs of softening demand for its signature phone, especially in China, and the lack of another blockbuster product in its pipeline.
The latest spurt in Alphabet’s stock price growth started around July last year. Since then the company has restructured, forming a new holding company and splitting into two parts.
Google includes its search engine, YouTube and related parts of the company, while a unit called ‘Other Bets’ includes its ‘moonshots’ such as self-driving cars, and encompasses Google Capital, the secretive X research division and Nest, which offers smart-home accessories.
It is to be mentioned that the Investors have appreciated the company’s new discipline on costs, which started with the arrival of new Chief Financial Officer Ruth Porat.
Alphabet shares are much more expensive, relatively speaking, than Apple’s, trading around 38 times earnings for the last 12 months, compared to about 11 times for Apple. Alphabet pays no dividend, whereas Apple’s dividend currently yields about 2 percent of the stock’s value annually.