Will Apple Remain The Most Valuable Company?

Analysts anticipate that the Silicon-Valley giant, Alphabet Inc. is all set to overtake Apple's position of most valuable company.

When the market closed on Friday, it gave both the investors and analysts on a hot topic for discussion –will Apple be dethroned by Alphabet Inc.? In the closing hours, the tech titan; Apple Inc. stood at the market capitalization of $540 billion while the internet search giant Google’s parent Alphabet Inc. showed the market cap of $524 billion. Both the companies are neck-to-neck with the latter being just $16 billion less.

More than a year ago, Apple had a bolstering market cap of $643 billion while then Google was way far behind at $361 billion. However, things didn’t go well for the Silicon-Valley’s iPhone maker. The last quarter report was the final blow on the company. When the company declared that it has the slowest growth in iPhone sales since its first release in 2008, all hell broke loose.

Not only did the company lose the investors and analysts trust however it is also on the verge of losing its tag of “the most valuable company.” Whereas Alphabet has impressed the investors with its humungous growth in ad market and Internet search. It is also working on other products like video, mobile, web browsing, email, and mapping. Hence, the company witnessed the stock growing up by 43% since the beginning of 2015.

Moreover, the analysts are not quite happy regarding CEO Tim Cook’s attitude towards the company’s performance. The conflict of ideas is widening between the two. While analysts are concerned about iPhone slow rate of sales, Cook boosts about the company’s strong profit. He also persisted that the high tech gadget maker is performing reasonably well in its other businesses. For example, Apple Watch –the luxurious watch –stood with the likes of Rolex. Its iTunes Store and other app store generate strong revenue for the company. Further, the proposed “iPhone 7” may also bring high revenue for the company.

Analysts argue that iPhone is company’s “core product” and the company’s other core products including iPad and Mac laptops are not having high sales either. Moreover, it is not only the “revenues” which are making the investors and analysts skeptical. The company has also adopted an unfavorable strategy of raising debt to meet its capital return activities. Raising debt to pay dividends doesn’t appreciate the value of the stock.

Amidst all this it looks like that Internet giant may overtake the innovative mobile phone developers soon. Alphabet’s stock is skyrocketing and many analysts are optimistic about its earnings –scheduled on February 1, 2016. Also, in the world of finance, a colossal earnings report can add billions to the value of the company in a single day. The diminishing demand of smartphones and growing market of digital advertising paves the way for Alphabet to stand tall in the Silicon-Valley.