Investing

As Year Ends, Alphabet Reigns as Second Most Valuable Company

Douglas A. McIntyre

Published: December 25, 2017 7:49 am

Last Updated: January 12, 2020 5:08 am

Almost all the coverage of company market capitalization recently is about Apple Inc. (NASDAQ: AAPL) which has come close to $900 billion. Almost none has focused on the next company, Alphabet Inc. (NASDAQ: GOOGL), the owner of Google, YouTube, and a handful of other business. Its market cap is $716 billion, well above the tier of companies below it, based on the same measure.

Like Apple, Alphabet is not a one product operation. While Google dominates the search market, at least among Western countries, YouTube is the largest video site in the world. It also owns Waymo, the autonomous car company, and Google fiber, a play at broadband distribution. One concern investors have, however, is that none of these businesses even approach Google in terms of revenue. Alphabet’s earnings announcements are dominated by information about Google search’s paid click level and cost per click, two essential metrics of the health of the search business.

Alphabet’s revenue will crack the $100 billion revenue level this year. Through the first nine months which ended September 30, revenue reached $78.5 billion. In the third quarter, it was $27.8 billion. That  means it could pass JPMorgan Chase & Co. (NYSE: JPM) on the Fortune 500 list of companies by revenue. That should put it 20th on the list. It might pass Chevron Corp. (NYSE: CVX) for the 18th spot as well.

Alphabet is unlikely to be caught in market cap by any of the companies just below it. Microsoft Corp.’s (NASDAQ: MSFT) market cap is $641 billion, which puts it in third place. Amazon.com Inc. (NASDAQ: AMZN) is fourth at $531 billion. Facebook Inc. (NASDAQ: FB) is in fifth place at $523 billion.

Many experts predict that Apple’s market cap will rise about $1 trillion in 2018 which would make it the first company in history to do so. Just as likely, probably, is the Alphabet will move above $800 billion, if the overall markets continue to rise at current paces.