Apple Stock: This Will Keep Apple Inc. Shareholders Up at Night

AAPL StockApple Inc. No Longer Top Tech Company

Google’s parent Alphabet Inc (NASDAQ:GOOG) has overtaken Apple Inc. (NASDAQ:AAPL) as the most valuable public company in the world for the first time in four years—more disappointing news for owners of Apple stock.

As of 9:35 a.m. in New York on Tuesday, shares of Alphabet jumped 3.5% to hit $797.00 a share, giving the Mountain View, California-based company a market cap of $541 billion. On the other hand, shares of Apple fell 0.5% to $96.00, leaving the “iPhone” maker with a market value of $532 billion.

The December quarterly earnings results of both companies—released over the past few days—helped accelerate the swap.

Google handily topped estimates after market close on Monday, a few days after the Cupertino, California-based company guided its first revenue decline in 13 years and reported the slowest-ever rise in iPhone shipments.

The last time Google was more valuable than Apple was in February 2010, when both companies were valued at less than $200 billion. At the time, Apple had yet to roll out its first “iPad,” the newest iPhone on the market was the “3GS,” and the “Mac” was the company’s biggest product line. Steve Jobs was still at the helm then. (Source: “Alphabet passes Apple as most valuable firm after hours,” CNBC, February 1, 2016.)

Apple went on a historic surge that year, thanks to the iPad and “iPhone 4.” Its market cap jumped from $180 billion to more than $650 billion in September 2012.

Google was the more valuable company from the time of its initial public offering (IPO) in 2004 until April 2008, when the iPhone era kicked off.

Alphabet’s latest surge and Apple’s latest rout started last summer. Since then, GOOG stock has soared 47%, while AAPL stock has sunk 29%.

For the most recent quarter, the online company posted earnings of $8.67 per share on revenue of $21.33 billion. Analysts had been predicting the company to post a profit of $8.10 per share.

The results were fueled by a booming advertising business that is supporting ambitious new projects.

Google’s advertising revenue increased nearly 17% to $19.0 billion, while the number of ads, or paid clicks, rose 31%. Analysts had expected paid clicks to increase 22%. (Source: “Alphabet profit sends shares up; overtakes Apple in value,” Bloomberg, February 1, 2016.)

Alphabet sales are estimated to climb 16% this year.

Alphabet, which changed its name and structure last year, is now focusing on its main Web business, while giving more insight into investments in new areas such as artificial intelligence, self-driving cars, health technology, and fast Internet access. (Source: “Google Parent Overtakes Apple as World’s Most Valuable Company,” Bloomberg, February 1, 2016.)

The main problem with Apple is its reliance on the iPhone, which now accounts for two-thirds of revenue. Sales in the fiscal first quarter increased only one percent from a year earlier, while iPad and Mac revenue dropped, weighed by slowness of the critical Chinese market.

The company said on January 26 that it sold 74.8 million iPhones in its fiscal first quarter, ended December 26, the first full quarter of sales of the “iPhone 6S” and “6S Plus.” The 0.4% growth in shipments was the lowest since the product was launched in 2007.

iPhone sales were expected to fall for the current quarter compared with the same quarter last year, Reuters reported, citing CEO Tim Cook on a conference call with analysts. (Source: “Apple sees first sales dip in more than a decade as super-growth era falters,” Reuters, January 27, 2016.)

For what it’s worth, Alphabet and Apple could easily be bumped from the running for the world’s most valuable company by market value should Saudi Arabia decide to sell shares in its state-owned Saudi Aramco oil company. It’s estimated that enterprise could be worth in excess of $2.5 trillion if it were publicly held. (Source: “Google Parent To Overtake Apple as World’s Most Valuable Company,” Bloomberg, February 1, 2016.)