02 February 2016

BUSINESS - Alphabet (Google) Most Valuable Public Company in the World


With a market capitalization of US$565 billion (+/-) Alphabet moves past Apple the former leader at US$539 billion.

Alphabet Inc. (Google) released its quarterly earnings report after the market closed yesterday and moved past Apple to become the world’s most valuable public company.

What does this mean? With the huge shift in economic and market paradigms it is becoming obvious that capital is moving away from devices toward ecosystems and services. Those who seek funding and those who invest need to pay close attention to where capital moves so they are not disadvantaged.

Furthermore, those involved in manufacturing, distribution and retail must also understand the meaning of this revolution. If capital is rewarding those who help consumers discover products and services more than those who produce, there are large implications for investments in technology, marketing, communications and media.

While Apple blames a slow quarter, the evidence suggests Alphabet was moving ahead since reporting its second quarter profit in July, 2015. Since then Alphabet has risen 28% while Apple’s shares have fallen 25%. Moreover, Alphabet continues to beat the Wall Street projection. Meaning the market guru's have been slow to respond to the shift in the flow of capital.

According to S&P's Silverblatt, achieving this milestone makes Alphabet the 12th company to achieve the title of most valuable company in the history of the index. Apple became the 11th company in August 2011. Other companies have also held the crown. They include Exxon (XOM -2.54%), IBM (IBM -1.45%) and Microsoft (MSFT -2.61%). Surely this places ecosystem and services ahead of energy, machines and software.

While Google executives hear the footsteps of large social media players like Facebook, it must be satisfying to see that building the largest ecosystem in the world has made them the market leader. Small emerging companies who are building ecosystems with the trust of an active subscriber base are on the right track. The patient building of subscriber services will be rewarded as capital gets wise and moves toward them.

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