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  • Why Alphabet is more valuable than Apple




    Apple Inc. brought in more revenue in the final three months of 2015 than Alphabet Inc. did the entire year. Ditto on profit, with Apple reporting net income of $18.4 billion in the fourth quarter while Google’s parent company had earnings of $16.4 billion for the entire year.

    So why does Alphabet GOOG, +1.22% GOOGL, +1.24%  look like it will overtake Apple AAPL, -0.93%  as the world’s most valuable company after a post-earnings bump Monday?

    Here are three reasons Wall Street is currently betting on Google instead of Apple.

    Growth rate

    While Apple has posted phenomenal profit and revenue thanks to the iPhone, the company now seems to be transitioning from a high-growth tech stock to a value stock. Alphabet, meanwhile, is still growing at a fast rate.

    Apple revenue increased 1.7% year-over-year in the fourth quarter, with its core product, the iPhone, producing its smallest increase in unit sales yet, 0.4%. Chief Executive Tim Cook admitted in the company’s earnings conference call that iPhone sales are likely to actually decrease in the current quarter, ahead of the expected introduction of an iPhone 7.
    Meanwhile, Alphabet revenue jumped 17.8% from the fourth quarter of 2014 without accounting for the price Google pays to acquire web traffic for its advertising products; after Google’s traffic-acquisition costs are factored in, the growth rate jumps to 19.3%. And Google’s core money maker, online advertising, is growing at a similar clip, 17%.

    “It’s all about trajectory,” Jackdaw research Chief Analyst Jan Dawson said in an email Monday afternoon. “Google’s growing fast and increasingly profitable despite its massive investments in these Other Bets, while Apple’s revenue barely grew last quarter and will shrink this quarter.”


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