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Can Google Surpass Apple In Terms Of Market Cap?

January 22, 2016 - Written By Kishalaya Kundu

With some media reports suggesting that the current-generation iPhones are just not selling as well as their immediate predecessors, the Wall Street’s love affair with the Cupertino, CA-based company has apparently hit a bit of a rough patch. The company’s share closed at the $96 mark on Thursday at the NASDAQ, which is a sharp decline from the $120 mark the stock was hovering at, in the first week of December. The company has reportedly lost as much as $230 billion in market cap since last July, when its share price hit a high of $132.07. Amidst all the stories of doom and gloom in China, the smartphone market itself reaching saturation point and persistent complaints of lack of innovation, the company that could do no wrong just a few months ago, has now suddenly become a pariah for investors.

Or has it really? Apple is still worth as much as $542.5 billion, making it the single most valuable private sector company in the world. The tech behemoth out of Cupertino is still worth a whopping $47 billion more than its Silicon Valley rival, who had a rented garage in Menlo Park, California as its first ever corporate office. While Google itself has gone through several changes over the years, including a massive restructuring exercise undertaken last year, its search operations have gone from strength to strength. While both companies are amongst the largest tech companies in the world alongside the likes of Microsoft and Facebook, the differences between them are quite pronounced.

While Apple continues to remain primarily a hardware vendor, dependent more on margins than on market share, Google has always been a service-oriented company depending more on reach than per-unit pricing. It’s not as if Apple and Google doesn’t cross path directly, what with the iPhone maker’s Apple Music, iTunes etc. being direct competitors to Google Play Music but Apple’s bread and butter continues to remain its hardware business. Similarly, Google does have its hardware offerings like its Nexus-branded smartphones, tablets and media players, along with Chromecast media streaming dongles and the like, but search – and now Android – is what brings in the lion’s share of revenues for the company.

As for Apple’s current rough patch, with a section of analysts and industry watchers expecting Apple to miss its earnings guidance, investors are apprehensive that the company’s stock might fall further. At the same time, with the recent claims from Oracle laying bare the earnings potential of Google’s Android eco-system, Wall Street might just start looking at Google in a different light, thereby breathing fresh life into the company’s already-healthy stock price. Google, of course, has never bothered to reveal its Android revenues separately, and its revenues from the mobile platform had always slipped under the radar till now. Also, the slowdown in China will not affect the company directly, as it basically earns zero revenue from the country. Apple, however, is wildly popular in the People’s Republic, and earns a significant chunk of its revenues from China, and is hence, much more exposed to the supposed downturn in the country’s economy.

While all of that, in theory, might mean that the alleged decline in Apple’s fortunes may result in Google going past it in market share, some analysts beg to differ. The company is apparently still selling a truckload of iPhones and MacBooks, and analysts are still overweight on the company’s stock, and are recommending their clients to take advantage of the falling prices to invest in the company. Google is also expected to do well in the future, and the company’s stock prices are tipped to hit the $855 level, having closed at $718.56 on Wednesday. It will be interesting to see who emerges on top after both companies declare their Q4 results later this month, but either way, be rest assured, you probably haven’t heard the last of it.