Google Tops Exxon in Market Value

By Douglas A. McIntyre Published Mar 21, 8:40AM EDT

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The new economy versus the old. Exxon Mobil Corp. (NYSE: XOM), which has its roots in John D. Rockefeller’s Standard Oil from well over a century ago, has had its market cap eclipsed by Google Inc. (NASDAQ: GOOGL), which was founded in 1998. Old world energy has fallen to new world tech.

Google’s market cap is $381 billion, second only to Apple Inc.’s (NASDAQ: AAPL) $733 billion. Exxon’s is at $354 billion, barely ahead of Microsoft Corp.’s (NASDAQ: MSFT) at $351 billion.

The difference in size between Exxon and Google is huge. According to the Fortune 500, Exxon had $407 billion in revenue and $32.5 billion in profit for 2013. Both numbers fell from the previous year. Its revenue size placed it second among all companies, only shy of Wal-Mart Stores Inc. (NASDAQ: WMT).

Google ranked 46% in the 2014 Fortune 500. It had revenue of $60 billion, with net income of $13 billion. Each number grew at close to 20% over the previous year.

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Exxon has barely diversified beyond the oil industry — exploring, transportation and refining. The dominance of crude as a source of energy will persist for decades. However, Exxon competes with other giants, which probably caps its chance to take significant market share. And the falling price of crude, on balance, will hurt its sales.

Google not only dominates one of the most important areas of the tech sector — search — its innovation includes the creation of the most widely used smartphone operating system in the world — Android. Google also owns YouTube, the world’s largest video site. However, Google has not figured out a way to make YouTube a large part of its revenue stream. Google is also a major force in e-mail, mapping and the browser segment. Its presence in some of these areas is so large that it has become a target of antitrust efforts, not unlike Microsoft was a generation ago.

Many analysts would argue the reason Google’s market cap is so large is that it has the opportunity to grow by 20% for several more years. That is not the whole of it. Google sits at among the most important crossroads in the technology industry. Its dominance in those places brings it pricing power and a foundation from which to innovate and expand further into the tech sector.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.