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Alphabet Dethrones Apple As World’s Most Valuable Company – Can It Maintain Momentum?

Alphabet, the recently formed holding company of Google, Inc., has officially surpassed Apple as the world’s most valuable corporation, a title Apple has held since 2012, as trading markets closed on Tuesday, February 2, 2016. ((For Alphabet, the Path to Becoming the Most Valuable Company in the World, N.Y. Times (Feb. 2, 2016), http://www.nytimes.com/2016/02/03/technology/graphic-alphabet-most-valuable-company-apple.html?ref=business.)) It achieved this with a rather brief market capitalization of $528 billion, becoming the 12th company listed officially as the “most valuable company” by Standard & Poor’s 500. ((Apple or Alphabet: Make This Your No. 1, USA Today (Feb. 8, 2016), http://www.usatoday.com/story/money/markets/2016/02/08/apple-alphabet-make-your-no-1/79821096/.)) However, the victory appears to have been short-lived. Apple managed to race past Alphabet in the intervening week, “trading for $532 billion to Alphabet’s $502 billion.” ((Id.)) This game of degrees has a lot of investors intensely interested in what the future may hold for the two major tech rivals.

As it currently stands, investors have placed their favor with the plucky underdog, Alphabet. Alphabet is uniquely situated in the tech market, as it mines online users’ personal data to track a vast array of information indexes, which it then sells to the highest bidders. ((Id.)) Such a practice has allowed Alphabet to absolutely dominate the internet ad business, with very little competition to show for its meteoric ascendance. This may present regulatory hurdles later on in Alphabet’s corporate lifespan, if law or policymakers decide that it simply possesses too much of the market for internet advertisement. But, for the time being, investors are riding the financial high that one source has attributed to “increased use of mobile search by consumers, as well as ongoing momentum in YouTube and programmatic advertising, referring to the automatic buying of ads”. ((Alphabet Comes Before Apple as World’s Most Valuable Company, News Portal (Feb. 8, 2016), http://cops2point0.com/2016/02/alphabet-comes-before-apple-as-worlds-most-valuable-company/.)) The recent dip in demand for Apple’s iPhone has allowed market commentators to muse about Alphabet’s bright, possibly dominant future. ((Id.))

Apple’s growth has been sluggish in recent months, relative to Alphabet’s adjusted earnings revenue. ((USA Today, supra note 2)) While this is indicative of a traditional growth model for a massive hardware company versus a rapidly expanding Internet company, Alphabet appears to have a bright financial future ahead of it. ((Id.)) That is, if it ever manages to legally wrest the official Alphabet domain from The BMW Group. ((Google is Now Alphabet, But it Doesn’t Own Alphabet.com, Tech Crunch (Aug. 10, 2015), http://techcrunch.com/2015/08/10/google-is-now-alphabet-but-it-doesnt-own-alphabet-com/.))