Alphabet soon may be valued more than Apple, the most-valued public company
SAN FRANCISCO — The stock market is signaling that the operations of Google's parent company, Alphabet, soon will be valued more richly than those of Apple, even though the iPhone-maker remains the most-valued public company by far.
That will be among the topics when Apple reports its fiscal fourth-quarter and year-end results on Tuesday, after markets close.
Thanks in growing measure to its huge hoard of cash, Apple AAPL is now valued at $659 billion, or almost a third more than Alphabet GOOGL GOOG.
Cash aside, however, Apple is now worth only about 6% more, and that difference has been narrowing fast.
The trend suggests tech investors who favor growth stocks — as opposed to dividend-paying stocks such as Apple — already favor shares of Google's new parent.
When 2015 began, Apple's market value, minus its cash position, was $454 billion, according to its securities filings.
Google, meanwhile, was worth $291 billion net of cash, which means the market then valued Apple's business operations as worth 56% more than those of its tech rival.
Since then, however, Google/Alphabet shares have soared, leaping 38% this year, as an explosion of ads on YouTube and mobile devices has goosed overall revenue growth.
Thanks to Google's stock surge, Alphabet is now valued at $504 billion, with a cash position of $73 billion.
Apple shares, meanwhile, are up a much-smaller 4% this year, merely keeping pace with the broader market for tech stocks.
Apple's cash pile, though, has been growing almost twice as fast as its valuation this calendar year.
As of June 30, Apple held $202.8 billion in cash and marketable securities, or 14% more than it held in December.
Based on its current market cap and last reported cash position, then, Apple's operations (net of cash) are worth $457 billion.
That's essentially unchanged from the $454 billion they were worth at the start of this year.
Meanwhile, Alphabet's valuation net of cash has soared to $431 billion, or just 6% less than Apple's.
Remember at the start of the year that investors were valuing Apple's operations at a 56% premium to Google's.
To be sure, the Apple side of this equation will need to be updated as soon as the company reports its latest results and cash position.
If Apple shares jump in response to better-than-expected financial results, the company will keep or even extend its slim lead over Alphabet in valuation, net of cash.
But the relative valuation trends of the two companies have been signaling for some time that tech investors seeking future sales and profit growth are better off owning shares of Alphabet.
Income investors, meanwhile, should hold shares of Apple, thanks to its generous dividend. (Alphabet pays no dividend.)
Follow USA TODAY technology columnist John Shinal on Twitter: @johnshinal.
Posted by: Kris Murray <krismurray@gmail.com>
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