Google parent Alphabet beats Apple on profit and sales

Google parent Alphabet is now the world’s most valuable company, stealing the crown from Silicon Valley rival Apple, after reporting higher profit and sales fuelled by a booming advertising business that’s supporting new projects.

Alphabet’s shares jumped 4.2 per cent as the market opened on Tuesday, pushing its market capitalisation to $542.2 billion. The web company had been inching closer to the iPhone maker in recent weeks as investors lost confidence in Apple’s smartphone business and wagered Alphabet has a clearer path to growth.

Apple first passed oil giant Exxon Mobil to become the world’s most valuable company in 2011. By changing its name and structure last year, Alphabet chief executive officer Larry Page has put the focus on the company’s main web business while giving more insight into investments in areas such as artificial intelligence, self- driving cars, health technology and fast internet access.

Even though Apple has also been building expertise in cars and AI, the secretive company has kept much of that under wraps. With iPhone sales slowing and China’s growth engine sputtering, Apple is on pace to post its first revenue decline in 15 years. Alphabet sales are estimated to climb 16 per cent this year.

“Alphabet’s core business looks very healthy,” Josh Olson, an analyst at Edward Jones, said. “That’s going to build investors’ confidence about the other bets they’ve been making.”

The shares of Mountain View, California-based Alphabet were trading at about $780 in New York. Apple fell along with most other technology stocks, shedding 0.6 per cent to $95.83. That gives the iPhone maker a market value of $530.6 billion. Alphabet’s fourth-quarter revenue, excluding sales passed on to partners, rose 19 per cent to $17.3 billion. That exceeded analysts’ projections for $16.9 billion, according to data compiled by Bloomberg.

Ability to innovate

The health of Google’s main business and investor confidence its ability to innovate has helped to more than double the stock price since 2012.

While Apple generates more than triple the revenue and profit of Google, investors focus more on future prospects than past performance.