Alphabet Passes Apple as Largest Market Cap After Earnings

Technology

Published: February 1, 2016 4:40 pm

Last Updated: January 13, 2020 1:47 pm

While Alphabet Inc. (NASDAQ: GOOGL), or Google, is not in all of the same operations as Apple Inc. (NASDAQ: AAPL), Monday held a critical issue for Apple’s status as the largest company in the world. This happened when Alphabet reported its fourth-quarter financial results after the markets closed on Monday.

The company had $8.67 in earnings per share (EPS) on $21.33 billion in revenue, compared to the consensus estimates from Thomson Reuters of $8.10 in EPS on revenue of $20.77 billion. The same period from the previous year had EPS of $6.76 and $18.10 billion in revenue.

In constant currency, revenues increased by 15% in the fourth quarter.

Aggregate paid clicks increased by 31% from the fourth quarter of last year, but were up only 17% sequentially. The aggregate cost-per-click also decreased on the year-over-year basis by 13%.

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Ruth Porat, chief financial officer of Alphabet, commented on earnings:

Our very strong revenue growth in Q4 reflects the vibrancy of our business, driven by mobile search as well as YouTube and programmatic advertising, all areas in which we’ve been investing for many years. We’re excited about the opportunities we have across Google and Other Bets to use technology to improve the lives of billions of people.

At the end of the quarter, Alphabet recorded free cash flow of $4.32 billion. On the books, the company had $73.07 billion in cash, equivalents and marketable securities, compared to $64.40 billion at the end of the same period of last year.

Alphabet shares closed up 1.2% at $770.77 on Monday, but the stock was last seen up about 7% after the earnings report. That lifts its $517.5 billion in market cap to $553 billion or so. If Monday’s after-hours earnings reaction holds up, then Alphabet shares will have passed up Apple’s $538.7 billion market cap.

While Apple’s market cap may be smaller, investors need to keep in mind that Alphabet is not the most widely owned stock versus Apple, and that Alphabet simply cannot be pushed by outsiders to make changes if the company does not want to. Larry Page and Sergey Brin have absolute control of the company due to the dual class of shares.