ExxonMobil Doesn't Play Second Fiddle to Apple Anymore -- The Oil Giant is Down to Third String!

ExxonMobil's market-cap duel with Apple has come to an abrupt end. Another tech giant has pushed Exxon down to third place.

Feb 10, 2014 at 2:00PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

ExxonMobil (NYSE:XOM) and Apple (NASDAQ:AAPL) have been playing their own game of thrones in recent years. One of these stocks holds the largest market cap on the stock market, followed by the other, since 2011. It's an epic battle to stir the blood and quicken the pulse -- if you keep an eye on such market metrics, at least.

XOM Market Cap Chart

XOM Market Cap data by YCharts.

But things have changed. Coming up from behind, Google (NASDAQ:GOOGL) has claimed the second place in the market-cap race, pushing Exxon down to the third spot. Exxon remains the largest market cap on the Dow Jones Industrial Average (DJINDICES:^DJI) because neither Apple nor Google belong to that exclusive index, but now it's only the third most valuable business on the stock market.

XOM Market Cap Chart

XOM Market Cap data by YCharts.

So what's behind this shift at the top? A couple of things.

Google shares went through some hard times in recent years, trading behind the Dow between 2010 and 2013. Not for a lack of business performance, mind you, but investors kept compressing Google's valuation multiples for several reasons.

GOOG PE Ratio (TTM) Chart

GOOG P/E Ratio (TTM) data by YCharts.

For one, Apple always played the more profitable hand in the mobile wars, leaving Google and its Android platform the lion's share of sales but only table scraps of profit. This is how Apple claimed the very top spot in the market cap marathon, and a key reason why Google didn't join the cap leaders.

Moreover, Google skeptics take a dim view of the company's business model in general. The barriers to entry in online search and advertising seem vanishingly low; surely, Google must be ripe for replacement by the next hungry upstart with a better idea?

But as it turns out (and don't call me Shirley), Google isn't exactly resting on its laurels. Big G's own research keeps the eponymous search engine relevant despite the best efforts of technology leaders and upstarts alike to topple the apple cart. Google's advertising machine has no equal so far.

And when serious threats do materialize, Google isn't afraid to haul out the wallet and buy its way to online dominance. YouTube is a classic case study of this strategy, and the $3.2 billion Nest Labs buyout shows that Google remains committed to protecting its future by any means necessary.

In 2013, Google investors started giving the stock some credit for this long-term vision, and the rest is market history. Google shares have gained 52% over the last 12 months while the Dow only climbed 13% higher.

Of course, Exxon has underperformed the Dow recently, with only breakeven returns over the last year. Oil prices have slowed down their once-unstoppable skyward climb, and the developed world is starting to get comfortable with the idea of using less black gold.

Source: Nasdaq.com.

Fellow Fool Travis Hoium calls Exxon one of the worst Dow stocks for 2014, suggesting that the oil giant may not be involved in that old race with Apple for the foreseeable future.

With Google on an undeniable upward trajectory and Exxon slowly fading, it's time to get used to technology stocks ruling the market again. And neither one of the top two stocks is likely to join the Dow anytime soon.

The everlasting giants really do matter to investors
Hanging medals on the largest stocks may seem silly, but there's a method to this madness. The biggest market caps today could point you to businesses with serious lasting power -- just look at Exxon's track record over the last decade! As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Anders Bylund owns shares of Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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