The Strategist

Alphabet's market cap hits $1 trillion

01/17/2020 - 09:12

Capitalization of Alphabet, which owns Google, reached $ 1 trillion for the first time in its history. Prior to this, only three IT companies managed to achieve this market value: Apple, Microsoft and Amazon.

Maurizio Pesce
Maurizio Pesce
The market value of Alphabet, the parent company of the search engine Google, reached $ 1 trillion for the first time for the first time in its history. At the time of publication, the company's shares on the Nasdaq exchange went up 0.76% and cost $ 1,450.16.

Since the beginning of the year, Alphabet shares have added more than 7%, and since June 2019 - 40%. Investors lay great hopes on the company’s reporting on February 3 about the next record figures in the advertising segment, Financial Times and Bloomberg explained. Alphabet is expected to report sales growth of almost 20% to a total of over $ 160 billion. As FT noted, Google has managed to present itself as the main beneficiary of the fact that the global advertising and marketing market has largely concentrated on the Internet. Advertising is a significant source of revenue for Google, and the search engine, in turn, brings 99.6% of Alphabet's revenue. The mobile advertising segment is growing, which overtook advertising on the PC in 2018. YouTube turned out to be a successful acquisition in its time, noted Mark Mahoney, an analyst with RBC Capital Markets. U.S. presidential elections will be held in 2020, and the cost of political advertising will also bring significant revenue to Google, adds KeyBanc Capital Markets.

Besides advertising, good results are also shown by the Play store, cloud services and gadget sales, which bring 16% of Alpabet's revenue. The company is getting more expensive, despite growing calls to tighten privacy and antitrust investigations by US authorities, FT added.

Alphabet reached a historic mark a month and a little after Google’s founders Sergey Brin and Larry Page announced their retirement from senior positions at the company. They continue to participate in the work of the IT giant as co-founders, major shareholders and members of the board of directors, but the operational management passed to the former head of Google Sundar Pichai. Only in the first two days after the announcement of the departure of the founders, Alphabet shares gained 2%, and Page and Brin's wealth grew by $ 1 billion each. Wall Street hoped that Alphabet, led by Pichai, would be more judicious in spending money, FT said.


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