Why does Google's market value surpass Apple?

Alphabet has consolidated all of its businesses—excluding the Google division—into a new unit called "OtherBets," which now reports separately. While divisions like Nest, Google Fiber, and Google X have struggled financially, Alphabet's core businesses—Search, Android, and YouTube—continue to thrive. This restructuring marks a significant shift in how the company operates and is reported. Following Alphabet’s first full earnings report since the reorganization, the stock price of Google surged, briefly surpassing Apple in market value. At one point, Google’s market cap reached nearly $565 billion, slightly ahead of Apple’s $539 billion. A year ago, Apple’s market cap was over $700 billion, more than double that of Google at the time. What changed in just 12 months? One major factor is the high cost of Alphabet’s "crazy" projects. The "OtherBets" division reported an operating loss of $3.567 billion for fiscal 2015, up from $1.942 billion the previous year. Despite these losses, investors seem more confident now, as the core business remains strong and shows consistent growth. The restructuring, announced by Google co-founders Larry Page and Sergey Brin in August 2015, created a new holding company, Alphabet, replacing the old Google structure. Under this model, Google became a subsidiary, while other ventures like Life Sciences and Calico were spun off into independent units. This move aimed to increase transparency and allow each business to operate more efficiently. In Q4 2015, Alphabet reported revenue of $21.329 billion, a 18% increase from the same period the previous year. Net income reached $6.043 billion, up from $4.654 billion. For the full fiscal year, Google’s revenue hit $74.541 billion, showing strong performance across its main platforms. Meanwhile, Apple faced challenges. Despite record revenues, iPhone sales grew by just 0.4% in the first quarter of fiscal 2016—the weakest growth since the product’s launch. Concerns about future innovation and product development have weighed on investor sentiment, leading to a nearly 20% drop in Apple’s stock price over six months. Analysts believe that Apple is focusing more on operational efficiency rather than breakthrough innovation. In contrast, Alphabet’s balanced approach—maintaining strong core operations while investing in long-term projects—has reassured investors. As one analyst noted, “As long as the core business stays stable, these investments can continue.” Google’s stock repurchase program and improved financial discipline have also contributed to the rise in share price. With a focus on both short-term performance and long-term vision, Alphabet seems to be striking the right balance. As Larry Page once said, “To keep up with the tech industry, you need some restlessness.”

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