Move Over Apple Inc., Google Inc. Is Ready for Number One

At this time last year, the iEverything maker was more than twice the size as the online search giant, a lead that has long since disappeared.

Jan 28, 2014 at 2:00PM

It was about two and a half years ago when Apple (NASDAQ:AAPL) reached a major milestone in its return to glory: It surpassed oil giant Exxon to become the largest company in the world, as measured by market capitalization. Apple's watershed moment was especially sweet for long-time iFanatics that had weathered a nearly 15-year storm before it completed the transformation from also-ran to world leader; thanks to the return of its savior, Steve Jobs.

In Aug. 2011 when Apple and its $337 billion market cap supplanted Exxon as king of the hill, Google (NASDAQ:GOOGL) was valued at a paltry $177 billion. At the time, the notion that Google had a chance to pass Apple as the world's most valuable company in the foreseeable future would have seemed outlandish. But if recent trends continue, and there are reasons to believe they will, we'll have a new value-leader before this year's out.

The tables have turned
Last year at this time, Google's market cap stood at about $248 billion, compared to Apple's $430 billion. As iFans know, even with a substantial market cap lead over Google at this time last year, Apple's $430 billion market cap was significantly lower than it was even a few months before that, when it topped out at $656 billion in Sept. of 2012.

Now, fast-forward to today. Google's market cap of $375 billion still trails Apple's $456 billion, but is quickly making up ground. Google's nearly 50% jump in share price the past 12 months, coupled with Apple's 9% decline in the same period, are the reasons for the dramatic change in valuations. The questions are, why the about-face, and will it continue?

Behind Apple's numbers
One thing was clear even before Apple's recent earnings release: Its investors operate under a different set of rules and expectations than most. Despite setting all-time records for iPhone sales in a quarter – Apple moved 51 million smartphones in its fiscal 2014 Q1 – and establishing a new high by selling 26 million iPads, Apple stock is getting battered.

The problem? Even after setting iPhone sales records, apparently Apple's results were below analyst expectations. Adding to the pressure on Apple's stock price was its rather tepid forecast for Q2. According to some industry pundits, Apple's recent deal with China Mobile should have pushed fiscal 2014 Q2 smartphone sales to even loftier heights, but it may not happen based on its forecast. And Apple's Q2 revenues are expected to only match the year-ago quarter, so questions are being raised.

Margin pressure is another concern often mentioned by Apple bears, particularly as the smartphone industry becomes even more hyper-competitive, and pricing becomes an issue. But it's Apple's perceived lack of innovation, historically an area of unrivaled strength, that's causing the most angst among naysayers. And it's here that Google really shines.

Where Apple struggles, Google excels
It's not Google's dominant smartphone OS market share or stellar financial performance that differentiates it from Apple, or why it's on pace to surpass its rival as the most valuable company on earth, it's innovation. While Apple rumors generally entail a new smartphone's size, color, or equally unimportant feature, Google's setting cities up with Fiber Internet connections.

And while Apple is supposedly preparing to release a phablet sometime this decade, Google is exploring artificial intelligence (AI), self-driving cars, and using white space to bring the Internet to under-served markets. As Google pushes the envelope, Apple is still putting all its eggs in the same, old basket.

Perception is becoming reality, and the perception is that Google is leading the world with innovative products and services, and that will translate to long-term growth. That's why Google is on track to becoming the most valuable company in the world before this year's out, and it doesn't appear Apple is doing anything to prevent it.

Flying under the mobile radar
Want to get in on the smartphone phenomenon? There's one company that sits at the crossroads of smartphone technology, and it's not your typical household name, either. Though you may not know the name yet, it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, China Mobile, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers