The comparisons between Google and Apple aren't as apples-to-apples as everyone in the media seems to think. If we're talking about the future of these companies, and their earning power, they are situating themselves very differently. Apple is really a consumer electronics company, Google is an artificial intelligence company. And investors think more money will be in the future of AI instead of consumer hardware and software, so even though Google's earnings are smaller than Apple's, the future earning power is so much more.
If Apple starts going faster on AI then I think it will be very interesting between these two companies.
I absolutely agree that comparing Google and apple is silly. But calling Google an "artificial intelligence" company is just feeding another buzzword into the fire.
Google's flagship product is a box that you can type words into, and get relevant texts/references/facts in response. It seems like a textbook example of AI.
Precisely. The image recognition and natural language processing that's "just a deep learning algorithm" today would have blown the socks off anyone ten years ago. Chess playing programs were AI until they could decisively beat all humans, and then we decided that chess doesn't require intelligence. Self-driving cars were AI until they got close to market and now apparently driving a car doesn't require intelligence. It would seem that only True Scotsmen are intelligent.
Many things would have blown the socks off people of a previous time. That doesn't make them all AI, especially since many of the results we see today are not due to novel techniques a ten-years-ago AI researcher wouldn't have known about, but rather to ten years' worth of advancement in refining the techniques and in the availability of computing power to use those techniques with. A lot of it is just "yeah, if we could've got X to run that fast or had that many processors to throw at it, we'd have had that back then".
So if you want to describe Google as a (insert thing here) company, really the thing to insert in the parentheses would be something like "massive computing infrastructure".
And for better or worse, "AI" is still associated in many people's minds with things that the Google search box isn't close to resembling. People expect an AI to hold a conversation, or be able to reach (and explain) novel conclusions, rather than heuristically guess the next word you'll type (given the computing power, not terribly hard given the informational entropy of human languages) or scan a large database quickly to return the result you asked for. People mostly don't see fast brute-force searching of a problem space, for example, as "intelligence", but that's most of the secret sauce behind game-playing "AI".
Even within the last six months I've seen very confident posts here to the effect of "an AI that is worth a damn at go is still at least 10 years off".
And yet Google's Go-playing approach still doesn't seem to involve fundamentally novel techniques. Most of the advance seems to come in refinements to existing techniques, and being able to throw resources at the problem on a scale nobody had managed before.
And here is the exact phenomenon we're talking about, in action!
Back when neural nets were "fundamentally novel" we didn't have the understanding or computing power to tap their potential. So they "weren't really AI" because they couldn't do much that was interesting.
Now, we have a better understanding of how to use them, and we have enough computing grunt to make them do really interesting things. But they're "not really AI" because they're "not fundamentally novel."
It's not the same thing previously rules were being fed into the computers now data is being fed into the computers and it is understanding or getting the rules by itself and then improving itself based on what it understands.
AI wont be created, A day will just come when the algorithms that learn and improve on its own will reach sentience.
I expect Google to reach it first simply becuase of the amount data and processing power in the Google servers.
> And yet Google's Go-playing approach still doesn't seem to involve fundamentally novel techniques.
So? The fact that it is worth a damn at playing go was unexpected to most people afaict. What do you mean "fundamentally novel", are you expecting the field to advance from cars that barely avoid accidents, to Ava in one fell swoop?
Frankly I would prefer that advancement in AI not occur in sudden unexpected bursts of progress, thanks.
>The image recognition and natural language processing that's "just a deep learning algorithm" today would have blown the socks off anyone ten years ago
I think the concepts behind this were known 10 years ago - they improved and made it scale/we got the hardware and productized it - but would it really "blow your socks off" ? Hell I'm kind of disappointed at the development speed, I was expecting real personal assistants (not something trivial like Siri) by now.
10 years ago general purpose image comprehension by computers was nonexistent and Google image search for $word basically just returned images with $word in or mentioned near the URL.
Nowadays you can search for "young einstein" and get 3 pictures of Yahoo Serious and 10 pictures of Albert Einstein as a young man. It still looks like magic to me even though I know a bit about how it works.
Yes, where is this blow your socks off natural language processing? Certainly nothing I've ever used has contained it. The best I see is shitty voice recognition which can't understand me 75% of the time and often terrible attempts to chop questions out into search queries.
Don't forget that Facebook is going to be a big player in this game as well- especially facial recognition, where everybody is helping them by tagging people in their photos.
If we characterize companies as strongly as "Apple, a consumer product company" and "Google an AI company", then Facebook is a worldwide identity tracking agency. They could pivot and be in charge of delivering birth certificates, DNA groups, ethnicity mapping, insurance-bank-police profiling... In fact I expect it to play a very major role in wars to determine targets.
you may want to read the book "The Circle" by Dave Eggers. It is about this exact concept, and is quite good (I'm actually only nearly finished with the book, so maybe the ending will suck and i won't recommend it anymore, great so far though!)
The problem with calling anything AI is that it's such a meaningless word in the context of computers. According to Wikipedia AI is "intelligence exhibited by machines or software" and Merriam Webster define intelligence as "the ability to learn" so I'd say we hit AI long ago. I'd follow the meaning further but I hate arguing definitions.
To put it another way, if we define a Scotsman as anyone born in Scotland and/or related to someone born in Scotland, we've essentially just defined a Scotsman as every organism ever to be alive on Earth.
I have to imagine when the term first started to be used people imagined an AI as something more human than neural networks. Imagine HAL or any other hollywood perceived robot.
I take the term AI to mean "a thing that people will actually acknowledge as being AI when it exists"—something that can only be defined retrospectively, but which still is a workable definition in that you can sort of predict what people will or won't want to have "wasted" the eventual definition of the term on.
My personal bet is on people placing that line squarely on the divide between "Stoic Guru" and "Active Academy" UX models[1]. An AI is probably, to most people, an agent that continues to think and learn when it is not being interacted with—by surfing the internet, maybe—such that it can generate novel outputs, and revise its own previous beliefs, with no user-visible step that would be perceived as "re-training." Something that will come to you with thoughts it has had that you'll find relevant, that were inspired by new data the agent has acquired not derived from your input.
A simple example that people would probably think of as "AI" (and which people wouldn't accept as a UX paradigm unless it was presented to them through an agent-based interface) would be a spam filter like GMail's that learns from the classifications of everyone who uses it, that would go back and reclassify messages that it now had a more refined opinion on. Nobody would want a dumb algorithm to take emails that "were" in their inbox and move them over into their spam folder—that's destructive!—but they'd accept a (virtual) secretary using their judgement to do so. Thus, AI.
A while ago AI hadn't been complex and deep enough to warrant categories (especially to the layman), so it was just a general moniker put on everything from a smart piece of code with some adaptability all the way through to singularity level computer intelligence (as we'd imagine it). Now we're beginning to realise that there are vast ranges of categories out there, but it will take some time for consensus use to form (especially since a lot of them overlap into what we perceive as general intelligence, which we so far have had difficulty in defining and pinning down)
It's more like, we know what 'intelligent' is, but it's hard to quantify, so we try to find problems that we think are at least as hard as 'intelligence'. when we solve those problems and the solutions don't resemble 'intelligence', we move on.
it may be the case that 'intelligent' is just a word used to make humans feel special things about mammalian brains, but it's also consistent that we overestimate the difficulty of the abilities that add up to 'intelligent'. It's the difference between moving the goal posts and having our perspective changed so that we realize that the goal is further away than we thought.
This concept seems to be a direct abstraction of hindsight bias.
In fact, the concept of hindsight bias feels very much like every aspect of life, also. As soon as you build the next great tower, you opt for a new wave of bigger, more powerful enemies (i.e., you level up), and so the solution for the last wave no longer feels that interesting anymore, and thus seems, perhaps, obvious.
Even if you forget the whole "where does the money come from?" angle, they're still an ad company: their flagship products are AdWords and AdSense.
OK, to be fair, search is still very important too (in fact the most important content provider for their ad business). So call them a "search and advertising company".
They use machine learning and are actively researching it, but that's true of a lot of companies. Is IBM an AI company?
At Google, AI does seem to unite almost everything they do, from search, image recognition, self-driving cars, and ad placement. Of course all their revenue is from ads, so in revenue, they're an advertising company, but in products, they're an AI company.
I'm not saying they don't do AI, I'm just saying it's not their unique focus that sets them apart from other companies. Search-and-ads sets them apart.
You could certainly identify very large datacenters, Big Data and now machine learning as tools that Google have pioneered. But they don't have an exclusive lock on those.
No, but I think Google goes a lot further with their research and application of AI than Facebook and Amazon. I don't see Facebook and Amazon developing self-driving cars or Deep Dreaming.
but serving appropriate ads can be well served by AI. There may be a question of the increased margin that can come from keyword-based to AI-based ads, but it is there.
This is an annoying meme. Are concession stands the flagship product of movie theaters?
People use Google for search, email, maps, etc. And that's what the company was built for. If they had a better way to monetize than ads, they would certainly drop ads.
> Are concession stands the flagship product of movie theaters?
Actually, yeah. I worked in cinema (as a projectionist) before getting into tech, and the management definitely saw the food counter as more important than the movies being shown.
So is McDonalds a drink company? It makes most of its money from drinks...
The way a company makes its money is only weakly correlated to the service it offers to users. Think about it: if McDonalds stopped selling food, it would not have any customers. If Google stopped offering search, it would not have any users.
If we're going to simplify or generalize, I would simplify McDonald's to being a "sugar and salt" company. Those are the cravings in the human brain that it satisfies.
But yeah, I agree with you. Businesses are more complex than individual touchpoints.
Google is a ad company who uses search to attract customers.
I don't see the McDonald's reference as the same, drinks are part of their food product. Ads are not a integrated part of search (google did not start out having ads).
If your magazine starts handling ads in every other publisher's magazines too and then starts handling ads in TV and then starts putting up billboards by the highways, I'd say the answer isn't so obvious.
Technically, movie theaters are in the business of selling "movie experiences", which include the movie, the dark room, the chairs, and yes, the concession stands.
True, it's not a perfect analogy. Popcorn is additive to the experience. Even if theaters could survive sans popcorn sales, they'd still keep it because it's part of the experience.
I was just referring to the fact that theaters make most of their money from concessions, but you wouldn't then call them a concession company. No one would go to a theater just for the concessions. They would (and do) go just for the movie though.
> "Movie theaters wanted nothing to do with popcorn," Smith says, "because they were trying to duplicate what was done in real theaters. They had beautiful carpets and rugs and didn't want popcorn being ground into it." Movie theaters were trying to appeal to a highbrow clientele, and didn't want to deal with the distracting trash of concessions—or the distracting noise that snacking during a film would create.
> When films added sound in 1927, the movie theater industry opened itself up to a much wider clientele, since literacy was no longer required to attend films (the titles used [in] early silent films restricted their audience). [emphasis added]
Either way you cut it (search or advertising), Google's flagship product's success depends critically on their ability to do machine learning better than other people.
I would be inclined to say search is still their flagship. While advertising is their monetary powerhouse, it is still search that leads their fleet of products as a household name.
Assuming you're correct, that means the whole market for google's primary revenue source took a century to bring in what Apple makes in 2 years.
Really goes to show how much the market works on the 2nd derivative, and how that can result in immensely disproportionate market caps relative to a company's profitability.
If I were Apple I would think about seriously ramping up the stock buyback at this point. If they keep it up long enough they could even take themselves private one day.
I would argue that Apple's reputation for quality design - reliability, build quality, simplicity (though these may be changing), along with first-class industrial and UI design - is what drives their products. The definition of a "trinket" is something that is of little value. Material artifacts with the above qualities have always been of value.
Google are a company whose core organizing principle is using statistical methods over obscene amounts of data. Apple is a company whose core organizing principle is selling desirable consumer products with class-leading design through the single most impressive physical supply chain in the world.
Though I fail to see any application of machine learning to write home about in their core business -- ads.
Search yes, they do a good job on that.
But given the amount the data they have on us (browsing history, profile, mails in Gmail) has anybody been that impressed with any targeted ad? I've seen targeted ads from "dummy" networks like the Deck that are 1000% times better for my interests.
I'm sure this is pretty proprietary information, but I do wonder what the value add of the AI-targeting is. Is it a relatively small bonus on top of a solid platform and audience for ads? Or is it the killer feature?
Recently I searched Amazon to read reviews of a book I bought on Kindle a few years ago. Now every website with Amazon affiliate advertising is showing me ads for that book.
Considering that Amazon could have run a simple account search to determine that I am definitely not interested in seeing ads for a product that I already own, I think that the AI-targeting ad revolution is a while off yet.
That is unrelated to Google, but I haven't seen anything there that would suggest they are running anything smarter.
I have the same experience. On my machine, only Safari is "vanilla" - other browsers have various levels of ad/js blocking. So the only time I see ads is in Safari. I can't believe they're still feeding me Newegg ads for components that I already own and have bought from Newegg. I understand that's not as trivial a problem as it sounds, but I can't help but think companies are overpaying for ads.
i have friends who work for retargeting ad-tech companies. That's those firms that bid for and deliver ads for things you just maybe bought.
The deal is those ads show up when the ad space is the cheapest. It's known as remant inventory. So the retargeters can pick it up for very cheap.
The deal is the companies KNOW that some people see ads for things they already bought. But some people are seeing ads for things like only considered, and bombarding them with ads does affect behavior. The question is, is the increase in revenue worth the cost of retargeting.
The answer is very much yes. Even as it annoys people who already bought it, which doesn't even factor since they already made the revenue from your purchase.
To be fair, Google is in the business of making money on ads. If the customer wants to throw money on a stupid ad buy, then that's not particularly their concern.
It's just as likely that they have done extensive testing and found out that for whatever reason, ads for products you already own still encourage you to buy other stuff.
A lot of assumptions we make don't hold up when you start gathering real data.
I prefer using the Stanford term "symbolics systems" for a larger tent that includes AI, but excludes business and scientific computing. Google search would fall into this.
I can search the internet way better. Email me what you are looking for and 9 times out of 10 I will send you back something better than what Google will spit out. Furthermore you won't even have to sift through 10 links, or change your search, I will do all this and send you the result back.
This is such an incomprehensible boast. Do I think that you might be able to deliver me handpicked results that are better than a Google search? Sure. Can you do it for me in 100ms or better, and at no cost?
What are you even proposing, human search agents? That's absurd.
Do I think that you might be able to deliver me handpicked results that are better than a Google search? Sure.
Ok, so you agree partially.
Can you do it for me in 100ms or better
Not all searches require an immediate reply, so I'll just focus on those. Looking at the list of the most expensive keywords on Google, it is safe to say the vast majority consist of searches that do not necessitate a decision at the moment of the first try. Think Attorney, Insurance, Travel.
Taking the most expensive keywords as a source: Attorneys, Insurance, Travel, etc... I'll use SuperLawyers + Avvo + Yelp for Attorneys. I'll go directly to insurance websites and compare rates. I'll go to Kayak, CheapOAir, Hipmunk and the likes for travel.
Apple's flagship product is a box that you can type words into, and get relevant texts/references/facts in response. It seems like a textbook example of AI.
Calling someone an "X company" means that they make their money from X. There are aspects of AI in targeted advertising, but not enough to call them an AI company rather than an advertising company. It doesn't really matter where they're going- that's what they aspire to be, not what they are. If you judge companies based on their aspirations, you end up judging them based on their most positive and idealistic version of themselves, rather than what they are, which is much more meaningful.
A much more cynical way to look at it is, judging a company based on its aspirations means judging them based on their marketing rather than their products, services, or actions.
Think of how differently Comcast would be perceived if everyone wanted to talk about the company Comcast wishes it was, rather than company that it is. Or any company you don't like for whatever reason.
>Calling someone an "X company" means that they make their money from X.
It doesn't necessarily mean that.
It's more common to associate "X" with their business competency.
If we always insist on X to be only defined by revenue, we then get the following type of soundbites that we pat ourselves on the back for:
- McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food
- General Electric is really a bank because GE Capital has higher revenue than GE Aviation or GE Energy
- Harvard University is really a hedge fund and not a school because the endowment income is greater than the tuition paid by students
- Lebron James is actually an advertising spokesperson instead of a basketball player because he gets most of his money from corporate endorsements instead of the NBA player contract. Same thing can be said for NASCAR drivers and Olympic athletes.
Are the twisted examples above really how we categorize companies/celebrities? We don't label NY Times, National Geographic, and NBC/CBS/ABC/Fox as "ad companies". Instead we respectively call them "newspaper", "magazine", and "tv networks". Being a conduit for ads does not define each of them as an ad company.
It's much more reasonable to think of Google Inc as a AI/search/maps/cloud company that happens to get most of their revenue from ads. They are not an "ad company".
We don't compare McDonalds with Donald Trump development properties. We compare McDonalds with Burger King. We also don't compare Google Inc with Omnicom Group; instead we compare Google Search with MS Bing, and Android vs iPhone, and other technologies.
- McDonalds is a real estate company
- General Electric is really a bank
- Harvard University is really a hedge fund
- Lebron James is actually an advertising spokesperson
Are the twisted examples above really how we categorize companies/celebrities?
Maybe that's not so twisted. Maybe they are how we should really categorize the above, and the common perception is just marketing/how they made their mark initially.
>and the common perception is just marketing/how they made their mark initially.
It makes no sense to categorize McDonalds as a real estate company because its cost structure, hiring policies, marketing efforts, and everything else about the company in no way reflect the components of a traditional marketing company.
If "LeBron James" was a publicly traded company and you categorized him as an advertising spokesperson, would you then take him out of the gym and have him spend 4 years pursing an MBA?
would you then take him out of the gym and have him spend 4 years pursing an MBA?
No. Neither would the shareholders. Also, he's a lot more successful than a lot of MBAs. The whole point is that maybe the preconceived notions and categorizations aren't all there is to it.
I think both forms of categorization are useful and insightful in their own way. If we restrict ourselves to either one form, we are simply closing our minds and restricting our understanding of the matter. Why can't models be valid and valuable at the same time?
> "McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food"
I find this interesting. Are McDonalds making most of their revenue from real estate rents from their franchisees and/or those involved in their supply chain, or is the bulk of this land outside their hamburger business?
McDonalds is an interesting case in that they own all (well, almost all) the real estate for all the restaurants. The franchise owners pay rent based on sales which can end up being hefty. Some activist investors are pushing them to spin off that real estate into a REIT so that both sides of the business can be more fairly valued.
Dollars wise McDonalds does make more in rent than in selling food (by about 2x).
Interesting thought, but the business competency is an important component regarding future valuation. If finance for some reason stops being profitable, GE still knows how to manufacture aircraft engines. If real estate becomes worthless, McDonald's can still sell people cheeseburgers for 99 cents.
> Calling someone an "X company" means that they make their money from X.
Sure, but even so (except for the way some people treat Google), we typically call companies that make their money by placing ads in a service or media offering an "X company" where X describes the service or media offering, not "advertising".
From that perspective, Google is an online services company, with AI playing an important role in some of its services.
Google did most of what they do now ten years ago, before their activity had much arguable "intelligence". They have used AI to enhance various existing services but the improvements hardly seem earth shattering to me [insert earth-shattering counter example HERE]. Google's more pure AI product such as the Google Car are so-far vaporware at best.
Calling Google an "AI company" seems like calling Ford in 1962 "a streamlining company" - which is does violence to the concept even if Ford in 1962 maybe some money with streamlined cars.
I think there's a dramatic difference in search 10 years ago compared to now, due to better natural language understanding, which is very much an "AI" technology IMHO.
I've had to un-learn my search query habits from the past. I used to attempt to express queries in ways that I thought would help the search engine (limit it to keywords, suppress keywords that are likely to produce false positives, etc.). Now, it seems better to put in sentence fragments, and the old way of a few specific thought out keywords is actually worse at producing the result I want.
The difference is small to the average HN user (most of us are just as capable of expressing queries both ways, and we'll find what we're looking for) but the latter kind of query is far more accessible to the average person.
The stock price of a company is based on predicting future earnings, so talking about the future of a company is pretty much unavoidable in this sort of discussion. You can ignore what management says and predict the future in some other way if you prefer, but ignoring the future entirely isn't possible. (Assuming that nothing will change is also a prediction.)
I don't know how you can call their self-driving cars anything BUT AI. We live in a pretty jaded world if you don't think that constitutes artificial intelligence. While it may not be a source of revenue yet, we are VERY close to it being one.
> Calling someone an "X company" means that they make their money from X. There are aspects of AI in targeted advertising, but not enough to call them an AI company rather than an advertising company.
eh, either way Google is described it's just trying to be a cute soundbite with next to no information.
You can call them an advertising company, but they create the products that most of their ads are seen in, so really they're an advertising company and a software company. They build the data centers all that software runs on or comes from, so they're also a data center company. And if they're using AI in most of their products these days (no idea), you could fairly add AI company on there too.
So what is the X in "they're an X company"? A better question is why does it matter what the X is? You don't gain any insight by filling it in.
Instead we could go crazy and use like two, even three sentences to describe what a company does, what its incentives are and where its constrained.
Data centers are just the modern version of what used to be called plant and machinery, and Google is just an updated industrial corp in the tradition of other former and current household names, but with a slightly more colourful logo.
The business focus matters because the ad market is in trouble, and unless Alphabet has something in the pipeline to replace ads, five to ten years from now the company is going to be where Yahoo is today.
This seems hard to imagine now, but no one expected DEC to fail, or HP to turn into that thing it turned into, or Microsoft to sit on a grenade labelled "Windows", or IBM to drift off to the margins of the web - and so on.
> The business focus matters because the ad market is in trouble, and unless Alphabet has something in the pipeline to replace ads, five to ten years from now the company is going to be where Yahoo is today.
What evidence shows the ad business in trouble? Alphabet recorded revenue and profit in the quarter.
> This seems hard to imagine now, but no one expected DEC to fail, or HP to turn into that thing it turned into, or Microsoft to sit on a grenade labelled "Windows", or IBM to drift off to the margins of the web - and so on.
Sure, but for every unexpected floundering there are many more predictions of failure that never occurred. I'm not sure how unexpected failures in general give any insight beyond that they exist.
How about "Alphabet/Google is trying to position itself as an AI company" instead of "is an AI company". That direction is still important to explain why it is valued like it is: investors are betting that it has good chances of succeeding in becoming an AI company.
How much of Google's profit(or even revenue) is not from tracking user data and advertising?
Search, Gmail, Android, Chromebooks, Nexus, Pixel, Youtube, Maps etc. everything is about selling advertisements after scanning user provided data.
The rest are either loss leaders or moats, or ones with unclear monetization scenarios like Fiber. One exception is GCE and GAE, but I don't know how much profit/revenue they're making. I would count Google Apps, but until recently they were scanning even paid Google Apps for Business accounts for ad tracking purposes.
They use AI to sell advertising and services (be it search relevancy, contextual awareness, filter out spam, etc)...
The reason why it's not incorrect to call Google an AI company is that Wall Street thinks they'll be able to shake out ever more cash from their machines in the future because of their position in ML and AI. It's their competitive edge and one that becomes more and more valuable as software continues to eat the world.
Your question is answered explicitly in the press release, if you wanted to Google it. But are you instead making a point about how that's bad or something? The business model is to give away services for free and then show ads to monetize, that's no secret. Do you contend this is a poor business model, or somehow immoral or something?
Wall Street values you based on future expectations and Google is being valued in part for its perceived lead in AI and the growth that will bring. Their main product (search) uses plenty of AI so it's not a stretch whatsoever.
Actually, Larry Page himself thought from very early beginning that Google is an AI company:
AROUND 2002 I attended a small party for Google—before its IPO, when it only focused on search. I struck up a conversation with Larry Page, Google’s brilliant cofounder, who became the company’s CEO in 2011. “Larry, I still don’t get it. There are so many search companies. Web search, for free? Where does that get you?”… But Page’s reply has always stuck with me: “Oh, we’re really making an AI.”
They mostly use the AI to try to convince you to buy shit. It may be an uninspired use of artificial intelligence, but it's still artificial intelligence.
> investors think more money will be in the future of AI instead of consumer hardware and software
No, first you are mistaking a bet on a single company for a bet on an industry. The obvious counterexamples being that there are no shortage of wannabe AI companies valued orders of magnitude lower than Apple, that doesn't mean wall street thinks devices beat ai as an industry gold mine.
Google is valued highly today because they print money today. They print money because of search and advertising. They are really good at this and that's why their market cap exceed's Apple's today.
These prices are not remotely rational. There's no serious investor that thinks Apple is going to shut the lights off inside 7 years which is what the current 'market cap' would tell you.
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Google is valued highly today because they print money today. They print money because of search and advertising. They are really good at this and that's why their market cap exceed's Apple's today.
...
That would be correct if they were value companies throwing off discounted cash flow but both Google and Apple are priced as growth companies. The market believes Apple has peaked in growth and that Google has a bit more potential. It's not clear why exactly from the earnings report of the holding company. Revenue for Google is 99% ad sales so it's not clear exactly where that bottom line revenue is going to come from. All revenue from the rest of the holding company was less then $500 million.
Which shows you how much the market knows. Apple's PE ratio was 11 back in 2009.
In fact the first years of the iPhone corresponded with a precipitous plunge in their PE ratio as their revenues rose rapidly, but their share price was dragged kicking and screaming along behind them.
Your numbers are off. I hesitated to respond because the actual numbers are still pretty immaterial (but technically material) overall, but it's more like ~$2b than $500m. That's significant, especially for GCP, which is growing quickly in an still very immature and very large market. Give it 2-3 years and GCP will have surpassed AWS.
Google has great AI people - arguably more than anywhere else - but the bulk of the company is not based on AI. I'm a former Google employee, and up until a few years ago, most of the company was very skeptical of machine learning. Many people still are. I left because my machine learning project was canceled - a manager had an older solution that didn't use machine learning, and he didn't want his pet project to be replaced (even though it had worse performance and was much harder to use), so we were canceled while about fifty lines of code away from launching. Other parts of the company may be different, but in our product area AI was a minus, not a plus.
No need to make it about Apple vs Google or some newspaper narrative. In a world with negative short rates, money essentially becomes a "bad" (or negative good). Ceteris paribus, companies who deliver a lot of it today or in the immediate future will be valued less than those with cash flows farther out.
I still think the market is making a mistake here, in that the real difference between Google's and Apple's investment projects is not in their nature ("moonshot" vs "mundane") but in their PR. Google just talks more about them.
Given that investors think that Google's stream of cash flows is weighted towards the future and Apple's to the present, though, it makes sense that in the current rate environment valuations are as they are. See also Facebook, Amazon, or Netflix.
No need for grand narratives about the relative merits, product and management philosophies, or management personalities.
That said, I disagree with the market and am betting this is a bubble that will pop soon.
That's an interesting take, because for many years I'm pretty sure the largest portion of their income was from advertising revenue. That makes them an ad firm. Yeah they've diversified, but let's be honest, they're in sales straight up first and foremost.
Both companies will struggle for the kind of revenue growth Wall Street is looking for. Ad sales account for 99% of Google revenue, with speculative ventures generating less then $500 million. It's all about finding products and services that people are willing to part with cash.
I feel like this comparison of the two started during the handset wars. If you'll recall they were very chummy companies before that with Eric Schmidt sitting on both boards. With the handset wars cooling down a bit I think the comparisons are becoming a lot less apt.
Also apple only spends about 3% of revenue on R&D. Google spends about 15% (and so does ms) if i remember correctly. I think at some point this is going to show. If apple isn't careful they might end up making the pretty but dumb phones of tomorrow.
Indeed. Apple has been ramping up R&D spending by about 40% per year for many years, which is a phenomenal ramp up, it's just that its revenues have grown even more dramatically.
AI had big VC run in the 1980s. At that time it focused on expert stems and logic computing. Now the emphasis is on big data and deep learning neural nets. Google can afford to nuture a technology for a decade while VCs wont.
I agree that they aren't same but I doubt if Apple is even in the same league as Google when it comes to AI.
Apple is a product company that makes iOS+Hardware for profit and also seeks rent to access this platform. Google is synonymous with search/advertising which is fancy word for media. For google that media comes first and platform monopoly comes second. That is why Google continues to offer all its services on iOS despite virtually owning Android.
For every product that Apple builds in future its success will be like a toss of a coin (of course biased). Google succeeds no matter which platform succeeds.
Both are at "peak margin," but Google's margins will fall slower than Apple's. Hardware margins are notoriously hard to maintain, Apple is the outlier, and it can't last forever.
Google is not an AI company. Google is a "knowledge" company. (Most of AI-like stuff from Google is actually a software that extracts relevant knowledge from a big database.)
Google makes money from that crazy amount of information they have available, albeit we must admit that thus far, they haven't been able to turn a real business from most of it: the real profitable way they use that knowledge is to serve us ads.
Nerds have known for years that Google is really an AI company, but do investors really see things that way yet? The stock didn't go up with the announcement of AlphaGo, though that could just be because they think that particular AI work won't give Google any competitive advantage in future revenue...
It's interesting to that it took this long, just considering the utility of each company. If Apple disappeared tomorrow I'd be moderately inconvenienced, I'd have to pick up an Android handset instead of my iPhone and maybe set up some new podcast feeds. If Google disappeared the world would screech to a halt.
How's that? To search the web, I'd go to DuckDuckGo or Bing or whatever. Other companies also provide web mail, maps, office document solutions, etc. Google's definitely better at those things, but using a worse version of those products would not cause the world to "screech to a halt."
Probably the most disruptive thing if Apple vanished would actually be every tech company suddenly needing to figure out how to use Windows or desktop Linux.
As far as "screech to a halt." is concerned, it's maybe a little on the exaggerated side, but I'd believe it. I've worked for 5 different companies of varying sizes from 5 to 1000 employees. All of them have used Google Apps to run their business. Email, Calendars, Docs, Basically the Apps suite in it's entirety is the core of communicating and information storage.
There's arguments for backups, etc but in reality if the common business person working at these companies sits down and none of their Google products work, their day will halt.
Having worked on the Drive team, I can assure you Google Apps (which includes GMail, the Docs editors, and Drive) has much more than 50 million. A quick search on public figures for these services will give better numbers.
Edit: Those are Apps for Work numbers, excluding consumers - obviously you can't compare just a subset with a total.
User Interface. Dropbox presented a beautifully clean metaphor for how your files get synced. It doesn't matter if you understand what "the cloud" is. My grandmother understands: "put things in folder, folder available elsewhere".
On the other hand we've got Google Drive. Is GMail using Google drive? Is Google Photos using Google Drive? Why don't folders other people have shared to me not appear in my folder? Why isn't 'Shared with Me' the same as "Mine". Is Google Drive the same thing as Google Docs?
Not to mention - Dropbox really pushed the "Desktop App", while Google Drive pushed the "Web First" approach. Add on referral bonuses, Dropbox had some good solid adoption - well, at least among free users.
I use both extensively - Dropbox Pro for everything personal, and Google Drive for everything at work, and I still get confused about the where I saved/shared files to in Google Drive.
> Google Apps has 50 million users, iCloud has 125 million
That source is pretty old and cites an even older source (it looks like it may be from Google I/O 2012). Searching for "Google Apps has 50 million users" actually gives articles from last year saying they have 50 million education users alone, so I'd say the number is a pretty extreme lowshot now.
But more importantly, why would you compare Google Apps and iCloud? The closer thing would be Android backup and iCloud, maybe?
We could probably think of alternatives for most of these things, but there are a lot of people who just use what came with their phone/browser.
Additionally, think of all of the Google-backed services out there provided by other companies. How many companies use gmail heavily that would lose all kinds of records?
Normal people would lose their e-mail too, and businessmen would lose a lot of their calendars. The actual solution doesn't matter as much as the data already invested in Google's solutions that would be lost if Google just vanished.
The world wouldnt screech to a halt though. We're talking about what would happen if Google disappeared and its not a hypothetical situation. It happened in China for a five year period starting in 2010. People who used Google services were very upset. Replacements sprung up and quickly improved. They never caught up to Google but they were good enough, along with propaganda and the threat of prison, to keep people from making more of a commotion.
The biggest loss to humanity (in my opinion) would be all the translation data they hold privately. But Google really just people and money. If Google the entity disappeared tomorrow all those people who still know how to do the work will just start working on it elsewhere and catch up quickly.
> We're talking about what would happen if Google disappeared and its not a hypothetical situation. It happened in China for a five year period starting in 2010.
My bad. I was thinking about what would happen if Google disappeared as in, one day their servers and services just aren't available for whatever reason, rather than a staged transition/fade out.
None search engine comes close to Google atm.
Also Google marketing and SEO employs a much, much bigger number of people than people working as a freelancers related directly to Apple I assume. (not employees, the freelancers and companies that use the Google/Apple as platform to run their businesses)
I love the idea of DuckDuckGo, and I used them for a year or so before I realized every other search resulted in frustration and me appending a !ge to it. So yes, there are alternatives, but I don't find them to be nearly as good.
Please don't spread information that is factually incorrect, especially not if it concerns a small company trying to compete with a much larger one.
"In fact, DuckDuckGo gets its results from over four hundred sources. These include hundreds of vertical sources delivering niche Instant Answers, DuckDuckBot (our crawler) and crowd-sourced sites (like Wikipedia, stored in our answer indexes). We also of course have more traditional links in the search results, which we primarily source from Yahoo!, and in some regions and scenarios, Yandex and Bing.
> If Google disappeared the world would screech to a halt.
I agree that Google vanishing in an instant would have a more tangible short-term effect than Apple doing the same. But I feel you paint them as (nearly) opposite ends of a spectrum. Google provides many centralized services that people have come to depend on, whereas Apple creates physical products that would continue to function even if the company ceased to be. But Apple provides some similar centralized services and its various stores that sell virtual products (apps, music, video).
Either disappearing would be inconvenient for a lot of people—notably those who use centralized services—but my opinion is that in both cases, people would adapt fairly quickly.
All that said, as someone who doesn't use services or products provided by either of these two companies, my instinct is to agree with you that Google feels like it provides greater net value to society than Apple.
you say this now that the smartphone is more of a commodity but indeed apple made huge impact by revolutionizing the smartphone market, google has a monopoly in search platform like FB has in social , thats the only difference.
By the same reasoning, the most valuable companies should be the dominant suppliers of food, water, electricity and maybe gasoline and basic internet connectivity.
> By the same reasoning, the most valuable companies should be the dominant suppliers of food, water, electricity and maybe gasoline and basic internet connectivity.
No company is as dominant in any of those areas as Google is in its area, or they probably would be. Water and electricity are often public utilities; while there are big food companies, there's no parallel to Google; there are a number of major oil companies, but no one single dominant one -- but those of the many in the top tier that are publicly traded are valued highly (from tens of billions to hundreds of billions), and several are not public so that no public valuation exists.
In the insanely unlikely event either company disappeared, it would mostly provide market opportunities; and how much it might "hurt" in the meantime is a very personal thing. I'd sure miss my iPhone or my Macbook Air way before I'd miss Google Maps or Search, the two Alphabet products I use religiously. Others might feel differently.
If Google were abducted by space aliens I'd immediately start an online ad exchange supported by a ubiquitous cookie. If Apple were likewise abducted I'd fork Android and hire a good industrial designer and try to eat Samsung's lunch before they come to their senses.
Neither company makes anything the average user can't live without, and neither company has a monopoly on stuff that excites nerds like us. Both are very very good at some things, sure, but let's not pretend the world really needs them per se.
I think we don't know what we would miss out on. Suppose Apple had disappeared before releasing the iPhone or iPad? Suppose Google had disappeared before it launched Wave or Glass?.....er...
Ok, cheap shot, but seriously though, without these companies flagship products the world would be a poorer place. Even their competitors products would be significantly poorer. But it's not so much the present that would suffer from the loss of these companies as it is the future.
Utility isn't necessarily correlated with profitability. Craigslist/wikipedia being obvious examples. Apple's good at making products that people will pay a premium for.
Not really, speaking as an IT leader at an F500 still running NT4.0 workstations and some Win98 desktops. Unsupported, isolated on VLANs to avoid infection, but still running. The same company is still mostly using Office 2003. If MS has 3rd party entanglement with VARs and SIs, Google has the same with developers & startups. I'm honestly not sure which would be worse for the economy if it disappeared.
Well consider the number of 3rd party services that would shut or require a significant amount of development to get back online as a result of google shutting down:
Paid clicks up 31% overall, on Google’s own sites, up 40%. That's a bit concerning to me, especially when you consider:
a) That growth is outpacing internet traffic growth, and has for many years now. Internet traffic CAGR is 23%[1]
b) The shift from desktop to mobile should have the effect of reducing clicks.
c) Since some of the growth is video, I would expect a decrease in click growth related to this as well. Video adds to bandwidth growth pretty directly. Click growth would be less direct.
Sergey and Larry, at least at one time, might have expressed concern:
"The goals of the advertising business model do not always correspond to providing quality search to users"[2]
Exactly. And possibly not even that---there are quite a few of those activities that can operate in conjunction with mobile. Exercise, talking, and TV for starters.
They are getting better, every single year, over more than a decade, in a way that click growth outpaces traffic growth. Despite circumstances that would counter the effort. It seems unlikely it's just targeting, without spilling over into something that's bad for consumers.
> They are getting better, every single year, over more than a decade, in a way that click growth outpaces traffic growth.
That they're getting better at it is why click growth outpaces traffic growth. If they stayed the same at it then click growth would equal traffic growth.
> It seems unlikely it's just targeting, without spilling over into something that's bad for consumers.
It could be one or the other or both. Care to present any evidence or reasoning as to why we should make one conclusion or the other?
They certainly do things today that they did not do 5 years ago. Like specific query results where everything above the fold on desktop is an ad.
I personally do not think that's good for consumers. I suspect, though, that you disagree.
On your other point, they are getting better every year as measured by a YoY comparison...not just plain growth. Double-digit percentage YoY improvement. That's hard to do.
It depends on how you defined "above the fold", but I have seen this on occasion. It's hard to replicate, though. For instance "credit card" is a search terms often overflowing with ads, but it's only giving a few to me right now.
Where GP is wrong is that this is something "they did not do 5 years ago". There were a ton of articles complaining about it in 2008/2009. Unless it is happening on many times more search terms than it was back then, it wouldn't explain the increased click rate at all. The fact that the increase was YoY makes it even more dubious.
>>The fact that the increase was YoY makes it even more dubious.
YoY click growth percentage has been higher than traffic growth for years and years for Google. I suspect there are a number of reasons for it.
The 100% ads above the fold did get a lot of complaints in 2014, specifically because Google announced it would penalize sites that did that. Quite a few examples of Google doing this were subsequently pointed out, due to the irony.
You are correct in that I don't have an itemized, timestamped list of the things they've done over the years to either push organics down the fold, or expose ads further down the fold.
There are many things they've done that are pretty subtle as well.
- The wikipedia information in the sidebar when you do informational searches used to have links to wikipedia...leading you away from google. They now keep you within Google, and include links to ads: http://i.imgur.com/j3w9LbP.png
- There are queries that became 100% above the folds ads within the last 1 or 2 years. Travel is especially aggressive: http://i.imgur.com/89iYCmc.png
- Other widgets that aren't ads per se, but serve to keep you on Google's site as you drill down to pages that will have ads: http://i.imgur.com/v1urMBm.png
> There are many things they've done that are pretty subtle as well.
> The wikipedia information in the sidebar when you do informational searches used to have links to wikipedia...leading you away from google. They now keep you within Google, and include links to adshttp://i.imgur.com/j3w9LbP.png
> Other widgets that aren't ads per se, but serve to keep you on Google's site as you drill down to pages that will have ads:http://i.imgur.com/v1urMBm.png
They aren't ads per se...so would have at most a secondary effect on ad click through rates. It's also hard to argue that this (and the other) examples would be the cause of user harm as you argued above.
> YoY click growth percentage has been higher than traffic growth for years and years for Google.
You're missing my point because that's exactly it. Unless things have changed substantially in the last year, and every year before that, these things wouldn't explain the growth in click rates.
>>That still has a link to wikipedia
The sidebar wikipedia info used to have all links that went to wikipedia. The one I posted isn't the best example for hat, but it is the best example of one with a directly monetized link.
>>That second box isn't an ad, it's just a called out search result.
It also consumes vertical space, pushing the organics down. The relevance is also quite low, being a link to a discontinued product.
>>You're missing my point because that's exactly it.
Not missing your point. I'm not saying the few examples I gave are everything they've done. I think they've been doing things like, for several years, this to sustain the expected growth. Lacking a dividend, the pressure to sustain growth rates is pretty high.
Edit: It's also likely that for other purposes (testing/deployment/whatever), these things (and similar ones I haven't noticed) have dials for where/when/how often they are exposed, either by geography, search terms, demographic, or some other criteria. A bunch of dials would also allow you to smooth growth if you wanted.
I didn't say anything about investment advice. My concern was from a consumer point of view.
You also put "funny feeling" in quotes, as if I'd said that.
In short, the repeated pattern of click growth outpacing traffic growth has me concerned that they are achieving that, in part, with strategies that are bad for the end user. Google says they care about such things. https://www.google.com/about/company/philosophy/
Non-anecdotal evidence is hard to collect, since Google doesn't release statistics like "organic click growth" or "real estate devoted to organic vs ads".
I can certainly post screenshots of queries that are 100% ads above the fold, but lacking the kind of information only Google has, they are, by definition, anecdotal.
Previously google used to organically list products in their "froogle" search. now all product listings are ads. Therefore it's not surfacing content from the entire web which almost always has products for cheaper prices.
are there no organic listings at all? or is it just that there are now way more paid listings so the first page is entirely paid placements? thats a pretty big difference.
I recall that when froogle/google-shopping first launched they were just filling in content from search results because they didn't have very much direct engagement by vendors. maybe that's changed now so the search results were just scaled back because not necessary.
I dunno. I'm willing to accept non-nefarious explanations for this. That doesn't mean it isn't on the whole better for google and their paid advertisers. Whether or not that also means its worse for consumers is an open question.
It looks like it was because of stale product data in shopping
>We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants.
This makes sense. I stopped using google shopping a long time ago precisely because it seemed like so many of the results were junk for whatever reason (staleness is a likely reason). "Junk" meaning the search result did not lead to an option to actually buy the product I was searching for. I haven't tried it since then, so I can't comment on if it's actually better now or if it's due to these changes.
for b) I would say the contrary. Have you tried entering in a common website from a mobile browser without an adblocker? You get like so many ads, SO MANY, one over the other, some full-screen some that just let you see the 10% of the real site, some with a pseudo-pop-up, all with those little "x" almost unclickable to close them that force you to click on the ad in the end.
And in the "free apps with ads" of the mobile store the situation is even worse... they'll often try all possible tricks to force you to click on the ads.
Can that really go on forever? I don't know anyone that deliberately clicks on ads. Ads usually act as a "don't buy" signal to me - I assume the product is of low quality or a scam because of the skeeziness of how they tried to reach me as a customer.
Like higher education, the online ads business seems poised to collapse.
A large part of our business is built on product listing ads and Google shopping. Regular people have no problem clicking on ads, the ads actually usually provide a much clearer path to buying they product than organic results.
In a lot of verticals without ads you would be concentrating most of the sales in the biggest players as it has become very hard to compete in organic search for anyone else.
> Have you tried entering in a common website from a mobile browser without an adblocker?
Not in a long time; Firefox Mobile with Adblock Plus makes the web far more usable on a phone.
The constraints of a mobile device make adblocking even more critical than on desktop systems. If a browser or mobile environment wanted to differentiate itself, it could pre-install and pre-configure an adblocker.
You could do it with a rooted phone and adfree android, which is like adblock plus but rewrites /etc/hosts to route all ad serving domains to localhost. This one simple trick convinces even ad supported apps that they are offline, and they cease to show ads.
I just avoid installing any apps that have ads in the first place. The only time I see ads is with the one app I use that embeds a WebView and loads webpages, many of which have ads.
I can't comment on Google's practices, but an honest ad network can generally detect accidental clicks and won't count them towards ad budget. This can be done by, eg, looking at how long a user remains on the click-through site before coming back.
a) Make organic results crappier, make paid ads look more like organic results. People may be more likely to click on paid ads.
b) You'd think this. From what I've seen, mobile ads have up to 4x higher CTR with a as much as a 30% lower CVR. This is from multiple high spend accounts I have managed. Fat finger misclicks? Mobile ad "cards" also look almost identical to the organic result cards.
Google used to roll major updates all of the time, now they come within 2 weeks of earnings releases, fairly consistently. Look for them to continue manipulate their black box (quality score) to help inflate CPCs, blend paid ads into organic (a la Baidu), reduce the number of organic results per page, increase the prominence of Shopping campaigns, remove advertiser control (no true exact match, or no exact match at all?) and generally try to squeeze SMBs by reducing organic visibility and subtly suggesting to try AdWords. Google's advertising business is at odds with providing the highest quality search results. They aren't really innovating in search, they're just turning dials to increase their earnings per mille for ads displayed.
Unfortunately, this is almost certainly a space where "absent any other variables" is too simplifying an assumption. Some confounding factors to consider:
* Is mobile growth rate so high that it outstrips the reduced expected CTR for desktop users?
* Is mobile use not displacing desktop use, meaning desktop CTR is not falling as fast as anticipated?
* Is mobile use growing in places where there was previously no desktop use? Those users previously had a functional CTR of 0; onboarding them should increase the total clicks even if it reduces the mean CTR.
> Mobile viewers click on ads less often than desktop viewers.
> So, absent any other variables...if mobile traffic is growing faster than desktop traffic, year over year, click growth would slow.
Sure, assuming that actual total traffic growth is constant; if desktop to mobile transition accelerates overall traffic growth, the increase in mobile traffic can be enough to even at a lower click/traffic rate increase total clicks.
I referenced this higher up, but here it is: we aren't shifting from desktop to mobile, because desktop has leveled off. We're taking time out of literally all the other stuff we do in life, and shifting that to mobile.
Yes, I get that, but the word "shift" in this context isn't all that important. The "desktop/high CTR" leveling off while "mobile/low CTR" grows was the important bit. I'm not the first person to call that a shift.
I would guess this is the ever increasing paid presence on the search screen. Take a look at a screenshot from 10 years ago. Today on a smaller screen you can't even see organic results. With some shopping and maps results you don't get much organic on a larger screen. I find it amazing this is not more discussed as losing value as organic search. As a marketer I see this often forces a company to often bid for their brand name searches as competitors will hog the screen if you don't. It will be interesting to see how it develops further but I can't see Google doing anything but owning search ongoing for the short to medium term.
People were losing their minds over the fact that iPhone shipments slightly declined. If you look at the year over year growth (excluding the massive bump for iPhone 6), it would show that AAPL is still ahead of the growth curve.
Which pretty much shows that the market value of a company is not based on what they sell today, but on the expectation of what they will sell tomorrow.
Does Apple do research in biotech (Alphabet's Calico)? Are they developing drones delivering wireless internet to the world (Google's Skybender)? Do they have an investment arm (Google Ventures)? Did they start an ISP (Google Fiber)?
People see Alphabet's increasing outreach that almost seems ludicrous. Then they compare this with Apple who seems to have been doing iPhones and iPads for 6-10 years, and doesn't seem to be interested in anything else (though this is slowly changing with Apple apparently getting into home automation and self-driving vehicles). It doesn't matter if it is true or not. This is what people perceive. This is what makes them value Google more than Apple. For all we know smartphones and tablets could be disrupted by another technology (the same way PCs were disrupted by phones and tablets) and Apple may not be ready for this next tech disruption, while Google is placing bets in many other markets.
Apple's brand trades a lot on having extremely well finished products with very polished experiences. If they started experimenting left and right like Google does, they would lose that brand image, which is arguably their most valuable asset (even above and beyond the technology itself). If Google releases Glass and it flops, it hardly affects their image ('well, yes, it's cool technology, that's what Google does, but I don't think people want it for now...'), if Apple does the same it would be thousands of articles about how Apple is losing its touch and can't possible survive without Steve Job's genius.
Maybe the only way around that is taking a page out of Alphabet's playbook and making a parent company with "riskier" subsidiaries with their own non-Apple brand?
Instead they release a "me too" watch, a "me too" music service, a "me too" laughable pro tablet. They are losing their touch. No need to say it... it is obvious.
>Apple's brand trades a lot on having extremely well finished products with very polished experiences
I don't fully agree with this. Did you have the first version of the iPhone? No copy and paste? WTF.
Antenna signal dropping because "you're holding it wrong!"? WTF.
The only thing you can hold to the apple brand without any criticism is the industrial design of the packaging and look of their products has been consistent and un-matched.
There are plenty of UX issues that have arisen that take away from the polished experience.
Sure I like their products, but im not deluded to think that they are beyond reproach.
The way I remember it: the product was still overwhelmingly better than everything else. Missing copy&paste was an "oh well" compared to owning an iPhone in 2007.
Apple's P/E was quite low even at the height of the iPhone growth. The expectation for what Apple will sell tomorrow is nothing, because they'll be out of business, and it's been that way for a long time.
Meanwhile, since Google was founded, Apple went from the Mac company to the iPod company to the iPhone company. Apple has a proven ability to reinvent itself, with more agility and success than Google or really any other tech company. But this has never been reflected in the market. The perception you mention is based on who the companies are, not what they do.
Apple could announce all of those products tomorrow, and the needle wouldn't move. Apple is doomed because Apple, and Google is the market's darling because Google.
Apple does, or Steve Jobs did? I don't think Cook is anywhere near Jobs. Meanwhile, Larry Page is not only still alive, but is positioning his company so that he still has creative power and final say.
As much as I love Apple, I'm not as optimistic of their future without Jobs.
It's interesting that the market is valuing Apple's ability to innovate in the absence of Steve Jobs at ~zero. Apple trades like a value stock right now; Wall Street assumes that they're a cash cow that is just going to be milked, and unlikely to have any future major hits.
If you (correctly) disagree with this assessment, there may be money to be made here. If you agree with it, well, I understand why Apple wouldn't look very appealing.
That applies to buying on margin or options with potentially unlimited downsides (among other things).
The market can do what it likes; my AAPL shares are paid for. I don't know how long they'll have to buy back shares before the fickle market changes its mind again but I can certainly wait.
> Which pretty much shows that the market value of a company is not based on what they sell today, but on the expectation of what they will sell tomorrow.
Just looking at the "Apple vs. Alphabet Market Capitalization Over Time" chart, this story appears to be as much about Apple falling as it is about Alphabet rising. And in that case I see what Apple is selling today.
iPods are obviously on the way out. iPads have been losing to cheaper tablets for a while now. Macs have been neglected to the point you can't even get one with a Skylake CPU. And now, the last week's news that iPhone sales are in decline. It seems Apple's fall is all about what they are (not) selling today.
Google has search monopoly Apple has nothing comparable. The rest of google projects are mostly there for google to claim that they are Tech company competing in many markets as opposed to a Search company.
Do investors really think Facebook can grow at the pace a 89.22 P/E ratio suggests? They're quickly reaching the point where everyone in the world who can get a Facebook account already has one. They're pushing hard to spread to poorer areas by offering Internet access, but how much marginal revenue/profit can a poor rural farmer add? If Facebook somehow magically increased their numbers tenfold at the same growth rate, which would make their numbers roughly match Apple's, the current P/E ratio would make them a 3.19 trillion dollar company.
People knock Apple for relying too heavily on iPhone revenue, but Google gets a pass because their even more unbalance reliance on search has a "bigger moat"? Their core product, ads, is something most people despise and put up with, not something they seek out. Let's hope that some of their moonshots actually pan out.
Now do Amazon which is a retailer, often running at a loss on the retail side, with a nicely growing Hosting business... but even the margins on the hosting business don't justify Amazon's P/E ratio.
I don't think the market is efficient, it has a lot to do with perception. Amazon, for instance, is constantly doing press releases for products, even products that have no future (this is a deliberate strategy near as I can tell from my time when I worked at Amazon)... while Apple does 3 or 4 product introductions a year, and doesn't do a lot of PR stuff (Though Tim Cook is getting interviewed a lot more than Steve Jobs did.)
I have a friend who works at Lab126 with some really interesting stories about the dysfunctional environment there. He's basically one of a handful or so engineers who have more than a 4 year tenure in his division. Their PMs are basically all fresh out of college. After the complete disaster that was the Fire phone, that team and its director got promoted and placed in charge of Lab126. As expected, everything went to shit.
No idea what the rest of the company is like, but internally, Lab126 employees treat it as a stepping stone until their resume or skillset becomes good enough for Apple, Google, etc.
Apple will always have a lower P/E because the costs associated with building and selling physical products is higher.
Facebook's financials are ~1/3 Google's and so is its P/E. It's a much younger company and seems possible that's it's revenue and profit could approach Google's.
I don't see anything unbelievable or even particularly unusual.
A P/E ratio of 14, and the company basically tripled their numbers in ~4 years. Does Google's P/E of 35.7 suggests we can look forward to a rough 10x increase in Google's numbers over the next 4 years?
A P/E ratio of 14, and the company basically tripled their numbers in ~4 years. Does Google's P/E of 35.7 suggests we can look forward to a rough 10x increase in Google's numbers over the next 4 years?
No, it means that investors didn't believe there was much room for further growth at Apple[1]. They were clearly wrong! (Note that if you think that they are still wrong then there is a good opportunity to make money here!)
(Also, P/E is often related to margin as well as growth potential. Google's better profit margin is a factor here).
[1] http://www.asymco.com/2011/03/24/analysts-apples-growth-next... - the quote here is "The P/E ratio has remained at despondent levels for over two years.... The logical explanation is that pricing reflects a consensus that growth will fall off a cliff... Growth may slow to 18 percent the following year."
For Facebook current profits are about $6bn a year. To justify a 319bn cap they'd have to earn maybe $18bn /year giving a 18x PE, or about 3x what they do today. I think it's quite likely they'll achieve that in the next 5-10 years.
You've got remember the billions of rural poor will probably be less poor in a decade or two.
The bet with Facebook is that one day they'll figure out how to get a little bit of money out of all their users. On the day that happens they'll have huge revenues. Their user base is absolutely enormous.
70% of the revenue and (maybe) 80% of the profit of Apple comes from a single product - the iPhone. Apple themselves have given lower guidance going forward. There is a limit to the number of people buying iPhone at huge margins every year. The total units might continue to grow but not at the current margins and not as frequently. Hard to be bullish unless some other product takes off.
Nope: there's Google ads, Google non-ads, and "Other Bets". Q4 Google non-ad revenue was $2.1 billion, or almost 10%, and this share has been steadily increasing.
yes, but no numbers on profits out of those segments.
OP was pointing out investor's criticism of Apple as a one-trick pony due to iPhone - I am pointing out that outside of ads, nothing generates any significant profit at Google either, even more so actually.
but whatever, HN really is the wrong forum for certain topics.
The "other bets" that are (in aggregate) losing money are things that Alphabet does that are not part of Google. While Google is nearly 100% advertising revenue, it has non-advertising revenue streams inside of Google.
And we only know that the "other bets" (non-Google Alphabet operations) are losing money in aggregate, not that all of them are losing money individually.
Moreover, that the vast majority of capex spend over the next year will be Fiber roll-out, which is pretty reasonably considered as a one time impairment in my opinion, and not remotely like data center build-outs, real estate purchases, etc.
People love Apple's products (for the most part). People hate ads (pretty much everyone). So this makes no sense to me at all that Google is worth more than Apple. If you imagine the future, no one really knows what each will do with all the stuff they are building, so saying Google is worth more than Apple in the future seems silly.
And yet the percentage of people who watch the Super Bowl explicitly to see the ads is a non-trivial percentage of the viewing population (obviously anecdata, but I know many people who throw super bowl parties for groups who have no interest in the football, and just want to have a party while watching the moderately amusing, big-budget ads with breaks for football in between).
I don't think people hate ads on principle. Some do, and they're vocal, but most people hate ads because they're annoying and obnoxious. If every ad was as well produced and as tailored to the content as super bowl ads are, people would be fine with advertising. Instead we get the ugliest, most obtrusively designed 10 second animations looping alongside articles and in between paragraphs, advertising disguised as content, and tracking scripts that reveal to questionable organizations an unsavory level of detail into our lives.
I'd compare Google's ads to consumer electronics as a category as opposed to the iPhone: they're many eggs, not just one. Search ads, DoubleClick, and AdSense are like the iPhone, iPad, and MacBook.
(Disclaimer: I work for Google, on open-source software that doesn't have anything to do with ads.)
It's worth noting that 30% of Apple is close to a $70B company, which would probably have $10B in profit. Granted the iPhone helps make all of that other business possible, but even non-iPhone Apple is pretty huge.
Sorry for off-topic, but what the heck happened to Imgur? It used to be a great simple way of uploading photos, now it seems the product people managed to fuck it up thoroughly. I browse Random Mode daily, and sometimes the front page, so I get the social aspect, still there is such an insane amount of cruft there.
AAPL isn't as hot as it's been in the past, and that's ok. No company stays at the top forever. As your numbers show, Google has a higher profit margin.
Very true, but Apple has been the darling for a long time, and Wall Street has be desperate to find any flaw in their plans. Apple is a big part of a lot of people's 401k and other investments, so paranoia prevails.
Alphabet is only just now entering its Apple-like growth phase, however. It would seem that it could only go up, whereas at some point, Apple will saturate the market and have to start going down. Seem, mind you. This has nothing to do with reality, only with investor psychology.
I'd expect years, if not a decade for those to make money.
I'm fond of how Google's voting structure is designed to prevent common stockholders from changing the direction of the company (for the same reason Elon Musk won't take SpaceX public until there are ongoing flights to Mars): investors are too concerned with short-term enrichment.
If all of your ventures are making money hand over fist, you're not trying anything hard.
Apple also started paying quarterly dividends in 2012[1]. Whereas, Google does not pay out dividends[2]. Apple's annualized dividend yield is 2.2% (for comparison, Microsoft's is 2.6%[3]).
Very impressive. I remember being a young teenager when Google first went public, and around the same time my parents were looking at investing a moderate amount of money (around 10K, if I remember correctly) in the stock market. I suggested they buy stocks in Google, they didn't take my advice, which I don't blame them for as taking investment advice from a 14 year old typically doesn't end well.
It will be very interesting to see where Alphabet/Google go in the next 10 years.
As an American I think it's pretty badass that something like 8 or 9 of the top 10 most valuable companies in the world are all American. I'm not sure if that means we're doing something right, but it's still pretty cool for a moment.
As an American I find it actually very disappointing. We have the wealthiest, most powerful companies, and a government that threatens to shutdown every year. Many citizens can't afford healthcare and basic necessities, and yet we have companies with billions of dollars tucked away over seas.
Both tremendous companies. I actually wish Apple would deploy some of its know-how and capabilities a little more broadly. Not everything has to be an immediate $20 billion opportunity.
Judging by some of Apple's patents that filter through the USPTO, there are clearly broader applications of those capabilities being studied deep within R&D. Yet the institutional memory of the disastrous, nearly-bankrupting sprawl of the 1990s is certainly at the heart of Apple's resistance to commercialize a lot of the wilder things its researchers and designers come up with.
First, Google abandoning Reader was a terrible decision. Easily worth a PM and a few devs.
Second, I understand that part of the reason Apple executes well is because it minimizes distractions. But I believe a well-executing company like Apple should be able to take on more projects effectively.
I, for one, am glad that Reader got shut down. Although I was a heavy Reader user, I think that the RSS ecosystem is better without it. Now we have a relatively healthy number of aggregating services and third party clients.
For me, RSS is the way informational web should work.
Well, it's an indictment against Ping anyway. It would be mighty disingenuous to somehow suggest that level of failure is a statement of the possibility of future success for them considering how big their hits are.
It's only disingenuous if you're stripping away the context of the thread, further upstream, ancestor comment said:
>>>On the other hand, that product stance helps [Apple] avoid Google Reader-type situations.
and GP replied:
>>Right, it gets them into more iTunes Ping situations.
followed by:
>But nobody was sad when it got killed, you know? Nobody misses iTunes Ping or iAds or MobileMe
Which is damning Apple with faint praise.
>It would be mighty disingenuous to somehow suggest that level of failure is a statement of the possibility of future success for them considering how big their hits are
That's a non-sequitur. No where in my comment did I extrapolate or attept to divine Apple's future failure/success.
Because Apple sells fashion products whereas Alphabet consists of a wide variety of companies with Google itself mostly making money with advertising? Other than having overlapping categories in their product and service portfolio, I have no idea how the two can be compared.
In fact they didn't fail at all. Google had no intentions of going forward with military robots. They were very clear about that when they acquired Boston Dynamics.
This is incorrect. They completely failed. Whether or not they intended to go forward with future military robot projects, the project they did execute was rejected by the customer, not closed by Google.
More than the $0 I did of Apple product. Google Express, Google Play Music (and/or Youtube Red, depending on how you look at it), a Chromecast. And a (branded, not AOSP) Android phone, which I think Google ultimately sees something for, though I'm not sure.
The most interesting part about signing up to Google Contributor has been the allocation reports. Try it just once on a 'top 10 list of celeb whatever' site to see how much they make per visitor.
The elephant in the room nobody seems to notice is, they have so much data that they can actually look ahead of curve for any industry or tech, and so can have very good tactical advantage, and being open to jump in to any tech, they can steer much easily then the counterparts.
Kudos to Google. I'm happy for them. But it's also worth pointing out that Market Cap is a horrendous way to measure how "valuable" or "powerful" a company is.
Companies A and B both want to raise $10B to fund a new investment opportunity. A decides to issue corporate bonds, because it doesn't want to dilute its shareholders. B decides to issue new equity instead, because they feel that their company stock is actually overvalued at the moment. Net result: A's market cap remains the same. B's market cap increased by $10B. No difference in future projected earnings/revenue between the 2 of them, but B now leads A in market cap.
Another scenario: Companies A and B both made $20B in profits over the past year. Company A decides to keep $5B in the bank, and returns the remaining $15B to their shareholders. Company B hoards all $20B, and doesn't do anything with it besides letting it sit in the bank. Company A's market cap drops by $15B because of their decision to issue dividends, and company B's market cap now leads A, just because they decided to sit on their pile of money.
If you want to judge how powerful a company is, look at its revenue, profits or total assets. If you want to judge how successful a company is, look at its investor returns. Market cap isn't really all that meaningful a metric to judge a company by.
In both cases you describe, the company with the higher cap is the more "powerful" company though. In example one, they have a lot more control of their destiny since they have debt and not more shareholders.
In number two they have more control because if an opportunity comes up that costs say 10 billion, Company B can act on that and Company A cannot.
> In number two they have more control because if an opportunity comes up that costs say 10 billion, Company B can act on that and Company A cannot.
You missed the example completely. Both companies raised $10B, either through debt or equity, and both of them spent/invested the money immediately. Net result: both of them have equal amounts of cash in the bank. But one of them has a market cap $10B higher than the other. Simply because of a tactical choice they made in financing.
There are minor advantages/disadvantages involved in debt vs equity financing. However, these differences are all 2nd order effects. At a macro level, they have remarkably similar financial outcomes. Read up on Modigliani-Miller Theorem if you don't get this concept.
> In both cases you describe, the company with the higher cap is the more "powerful" company though. In example one, they have a lot more control of their destiny since they have debt and not more shareholders.
The company with the higher market cap is the one that raised $10bn using equity and not debt. You could say that the company with more equity has more control of their destiny as it has less debt (equity is owned by the company shareholders, debt is owned by third parties), but this is not what you wrote.
> A decides to issue corporate bonds, because it doesn't want to dilute its shareholders. B decides to issue new equity instead, because they feel that their company stock is actually overvalued at the moment. Net result: A's market cap remains the same. B's market cap increased by $10B. No difference in future projected earnings/revenue between the 2 of them, but B now leads A in market cap.
Er, there is a difference: A added a bunch of future debt-service expense that B didn't; presumably the expansion that each A & B funded has future expected revenue, but A's future expenses cut into that, while B, with equity financing, didn't add expenses. So, B's actual value should be greater than A's, which the market cap in your scenario reflects.
There are good criticism of market cap as value, but yours isn't one of them.
You've overlooked a number of vital points that render your logic false. I could explain it to you, but I doubt you'll believe me. This is a very technical and complicated issue. Google for Modigliani-Miller Theorem. It addresses exactly the fallacy you've described.
Scenario 1: B's existing public equity and future EPS is diluted by the new issue, and the market cap should remain similar.
Scenario 2: A's share price now has a dividend stream implying future returns, which will increase the future value of the shares. Yes, the market cap will drop by $15B on the dividend date, but two similarly performing companies, one paying predictable dividends, and one not, should already be priced differently. I'll concede that the modern practice of just not paying dividends complicates this a bit, and biases the pricing toward pure speculation.
Scenario 1: B's existing public equity and future EPS is diluted by the new issue, and the market cap should remain similar.
This is factually false. Ask anyone with a background in finance and they will tell you so.
Scenario 2: A's share price now has a dividend stream implying future returns, which will increase the future value of the shares.
If companies A and B start off with the exact same market cap, and generate the exact same profits every year, and A keeps paying off the profits in the form of dividends, and B refuses to do so and hoards the profits in its bank account, B's market cap will keep rising further and further ahead of A's market cap. Again, this is a basic financial fact, and anyone with a background in finance will tell you so.
You can also use enterprise value (equity+debt-cash) to solve the two issues you mention. By the way, using that metric Google has been already ahead of Apple in the past.
Yes. It's because of the idiotic way the Dow formula works. The Dow is a price weighted index. To compute the value of the Dow, you sum the per-share prices of the constituents and divide by a magic divisor. So a $50 move in GOOG (~6.6% change) and a $50 move in AAPL (50% change) would have the exact same impact on the value of the index. The kludgey solution to this problem is just to not incorporate high priced stocks into the index.
Incidentally this is why when you hear anyone quoting the Dow you can tell immediately that they are either clueless or an innumerate moron.
The lower the price the easier to buy, so there should probably be some weighting on stock-price to remove some weekend warriors from the equation on many-shared stocks, and to reflect the barriers to entry on stocks like BRK.A.
The Dow is useless as a stock index. It's composed of only 30 stocks, so a big move in one of them (like when Caterpillar announced a restructuring charge and its stock tanked by 20%) will be reflected in the index even if it has nothing to do with the broader market. Also, the index tends to skew toward older blue-chips (hence the name "Dow Jones Industrial Average), so it doesn't reflect a lot of what's actually going on in the market. There's not a single Internet stock on it, for example: the "technology" sector is represented by Apple, IBM, Cisco, Intel, and Microsoft, and Amazon/Google/Facebook/even Ebay & Yahoo are conspicuously absent.
Anybody with any sort of financial literacy uses the S&P 500 as the proxy for the U.S. stock market. Even that has its problems, but it's a lot closer to meaningful than the Dow is.
No, but who would it replace? Apple was only added last year, and there isn't that much turnover on it. There currently are no pure online companies on there, and despite the role of tech in today's world, only a few companies in the space (MSFT, Cisco, Apple, IBM)
According to Google Finance, it appears that Alphabet has a market capitalization of $517B, which is far different than the $558B quoted in the article. This does not appear to be a temporary fluctuation. https://www.google.com/finance?q=NASDAQ%3AGOOGL
Am I missing something? Based on the current market cap numbers on Google Finance, Apple is still higher than Alphabet.
This is based on after-hours trading, where Alphabet is up 9%+ after an earnings beat. The marketcap that you see in Google Finance is calculated based on the price at the end of the trading day, not after-hours trading.
"Alphabet shares (GOOGL) jumped 6% after Google's parent reported estimate-topping fourth-quarter results after the bell. Its combined share classes were then worth $554 billion, surpassing Apple (AAPL), which had a value of about $534 billion and whose shares were down slightly after hours."
Yes, and if you look at the market cap on both of GOOG and GOOGL on Google Finance, you'll note that they are the same (after close -- during trading they seem to be very close but slightly different, probably for timing reasons) and if you do the math, you'll see that for each they aren't reporting the individual cap but the combined cap.
My first reaction was that the problem was one or the other share class being excluded, and then I checked exactly the sources you cite and checked the numbers and realized that couldn't be the problem if.you used Google Finance reported market caps, because they don't report it that way.
Microsoft reached an intraday high share price of $119.94 in December 1999. With 5,160,024,593 outstanding shares, it had a market capitalization of $618.9 billion.
Well, abusing their search dominance among other things like making ads indistinguishable from organic results and paid placement on verticals like shopping/hotels etc. was eventually going to pay out.
More details on how Google manipulated search rankings manually to make more money:
>A previously undisclosed report by staffers at the Federal Trade Commission reveals new details about how Google Inc. manipulated search results to favor its own services over rivals’, even when they weren’t most relevant for users.
>In a lengthy investigation, staffers in the FTC’s bureau of competition found evidence that Google boosted its own services for shopping, travel and local businesses by altering its ranking criteria and “scraping” content from other sites. It also deliberately demoted rivals.
>For example, the FTC staff noted that Google presented results from its flight-search tool ahead of other travel sites, even though Google offered fewer flight options. Google’s shopping results were ranked above rival comparison-shopping engines, even though users didn’t click on them at the same rate, the staff found. Many of the ways Google boosted its own results have not been previously disclosed.
>One way Google favored its own results was to change its ranking criteria. Google typically ranks sites based on measures like the number of links that point to a site, or how often users click on the site in search results.
>But Marissa Mayer, who was then a Google vice president, said Google didn’t use click-through rates to determine the ranking for its own specialized-search sites, because they would rank too low, according to the staff report
>Instead, Google would “automatically boost” its own sites for certain specialized searches that otherwise would favor rivals, the FTC found. If a comparison-shopping site was supposed to rank highly, Google Product Search was placed above it. When Yelp was deemed relevant to a user’s search query, Google Local would pop up on top of the results page, the staff wrote.
>Other regulators have found similar practices. European antitrust authorities in 2013 said Google had a different, “specialized” search algorithm for ranking its own content.
>To bolster its own listings, Google sometimes copied, or “scraped,” information from rival sites. According to the FTC report, Google copied Amazon’s rankings of how well products were selling, then used that information to rank its results for product searches. Amazon declined to comment.
>While Google promoted its own results, it sometimes demoted rivals, the FTC staff found. For example, Google compiled a list of comparison-shopping sites and “demoted them from the top 10 web results,” staff wrote. According to the report, Google users in tests didn’t like the changes; only after Google tweaked its search algorithm at least four times, and changed the ranking criteria, did the new results get “slightly positive” feedback, the staff said.
>Google’s efforts paid off, the FTC found. It said Google’s maneuvers reduced Web traffic to rivals, and increased traffic to Google sites.
Google's purpose is to give users the most relevant results. No Google algorithm update goes through without users liking it; it doesn't matter how much profitability it increases.
The parent of your response points to an FTC report (an internal one that was leaked).
Within that report, they show how Google was able to tweak the questions until end users stopped liking something they did like with the previous set of questions.
The questions being tweaked were specifically about a type of site that competed with Froogle/Google Shopping that Google wanted demoted.
Except, for example, when Google decides to provide inferior results (ie inferior as determined by Google search), which may still result in anti-trust action in Europe
> Google's purpose is to give users the most relevant results.
No. Google's purpose is to extract as much money as possible from advertisers. In other words, they find the most stupid and desperate scum willing to pay the most per whatever (i.e. "10x growth hackers"), then separate them from their wallets.
A few months ago. They re-organized the structure so that Alphabet became the parent company and Google became the subsidiary. Larry Page heads Alphabet while Sunder Pichai heads Google.
Some of the companies purchased by "Google" became subsidiaries of Alphabet as well.
That may be technically true today, but it feels a little like parents taking credit for their child's accomplishments.
That distinction means less and less as time goes on, anyway.
After learning from a billion human lifetimes, and being coded by 100,000 humans' combined efforts, would it be such a surprise that something greater eventually emerges?
"SEO isn't good for users or the Internet at large. ... It's a bug that you could rank highly in Google without buying ads, and Google is trying to fix the bug." (1)
That statement is more-or-less the reality of every google-dependent business in the world at this point - Google is getting better and better at charging advertisers for their product - everybody is going to wind up paying the Google tax and this Quarter's results are evidence that GOOG is moving in the "right" direction to that end.
I feel like there are a fair number of reluctant capitalists employed by this company. I wonder how long they can post these kinds of numbers before something breaks.
Precisely why the restructure Google into Alphabet. Market looks for potential earning. And the various moonshot projects is the marketing way of telling the market we're the future. R&D in the open is paying off in this sense for Alphabet/Google. And the market do not see those great potential products brewing in the labs of Apple, Microsoft, IBM etc.
Prices alone are not comparable across companies. But if you multiply by the number of shares, you get a sort of measure of what it would cost to buy the entire company. This is called the market capitalization.
It's clear you have no understanding of markets. Price per share is meaningless. What is being compared is the market cap (Price per share * Number of shares outstanding). In other words, the total value of the company.
You're all talking about Google being more valuable as if Apple did not lose a ton of value since Jan 1 in the scares. Majority of the loss has been in generalized fear. Google hasn't really done anything to grow past them. They just stayed where they were and Apple fell below them. Lets please keep this in mind when we throw around ideas like one is better than the other as a result of this.
First off, never claiming to understand the whole stock market or being an expert. I'm am amateur trying to make sense of this. But here is what I know very tersely (at work, can't write a paper here.)
China is highly leveraged and their stock market was crashing. Their very high spending is often accepted because of their continuing growth which people have been assuming was a lie for the past 7(?) years. They always say it's 7% growth. With a stock market crash people think that maybe people are waking up that the growth isn't there and China won't be able to sustain much longer. Thats not good for apparently many far reaching reasons.
Oil is crashing for many reasons which you could speculate about but not know for sure. The reality for the US markets is that many smaller oil companies are highly leveraged because oil was so expensive and they were funded with the idea it'd stay above something like $50/barrel. Their methods are more expensive than say Saudi Arabia's methods which allow them to sell much cheaper (although they need revenue which they're offsetting by selling bonds). Here is where I'm lost a bit, but somehow this is tied to the banks again who might be in trouble if they all start failing.
Not to mention people have been calling a correction for almost a year now based on debt levels, global banking issues, global economic issues, high P/E ratios, etc. to happen sometime around now till next year.
The stock market fear indicators on money.cnn.com[0] were at extreme levels for several days in Jan. Plenty of issues with fear and emotions in the markets right now. Some of which are well placed fears.
Apple was going down a lot during those periods of fear well before their earning call which is what has been sealing the deal. I think during that major sell off people thought it was the "top" and were getting out.
interesting adjective "most valuable." To many that equates to revenue generated, to others profitability. Haven't read this article but starred for later I'm curious to see what it says.
I don't see the value in commenting if you haven't read the article yet. company value in most cases is based on market cap (stock price x shares outstanding). It'd be more constructive to read and then ask any questions you might have!
"To many that equates to revenue generated, to others profitability"
He happened to add that he would read the article which is why I am guessing as of when I viewed the comment it was heavily downvoted.
The heavy handed downvoting is what I don't like about HN so quick to jump and assume there is no value in the comment. There was. Although I know the definition for sure there are "many" people who would read "most valuable" and not know the true definition. [1]
[1] My point being there is value in the observation of people who aren't clued in to that fact.
For public companies this is always going to mean market capitalization, which is the number of outstanding shares multiplied by the share price. This is the amount that would be required to instantaneously buy all the stock were it for sale at the listed price and thereby gain 100% ownership. (In reality this never happens, and quickly buying large amounts of a stock typically elicits an additional premium on top of the list price. Buyouts of public companies tend to be for a significant percentage higher than the listed price.) So the market cap is in a way, quite literally, the valuation of the company.
EDIT: Italicized additions. Thanks for the feedback.
> This is the amount that would be required to buy all the stock and thereby gain 100% ownership.
This is not true. Stock price is marginal price of a share -- the point at which all sellers are askin more than all buyers are accepting, not the price that every share would sell for.
Which is fairly easily demonstrated by the fact that actual acquisitions of going concerns are usually at a premium above the market price at the time they are negotiated.
Not at all true. Most obvious reason being control premium (which applies to all buyers, but lot of other reasons why price paid by a buyer would be different, for example expected synergies)
Really just share price x shares outstanding - by one valuation method, share price in theory is driven by expected present value of future dividend stream, but even this is also very different from what you said (company's actual cash flow)
If Apple starts going faster on AI then I think it will be very interesting between these two companies.