Google Surpasses Apple Inc as Most Valuable Company in the World

Investors pretty much expected big losses on these bets, and instead focused on better-than-expected revenues and profits thanks completely to Google’s massive advertising business.

Alphabet’s reported quarterly profit rose five per cent to US$4.92 billion on the back of strong online advertising revenue, particularly from searches done by holiday season shoppers using smartphones or tablets.

“As long as the core business continues to operate well with accelerated revenue… investment in those businesses can continue”, said Mr Ronald Josey of JMP Securities. That exceeded analysts’ projections for $16.9 billion, according to data compiled by Bloomberg.

“We think the current re-rating in GOOGLE shares is two-thirds of the way complete and is likely to grind to $1000+”, Ross Sandler, a Deutsche Bank analyst, wrote in a client note. If not for employee stock expenses and certain other items, Alphabet said it would have earned $8.67 per share. “We’re excited about the opportunities we have across Google and Other Bets to use technology to improve the lives of billions of people”. Excluding one-time charges, the company made $1.57 per share versus expectations that it would earn $1.42 per share.

Its ownership of YouTube added to the expansion in advertising and mobile search options have driven most of Alphabet’s stunning revenue growth in Q4, the company’s CFO Ruth Porat affirmed in a press release. (Google reorganized itself under Alphabet last October.) Investors pushed up Alphabet stock $35.73, or 4.6 percent, to $806.50 in extended trading.

The Google unit houses its Internet and related businesses such as search, ads, maps, YouTube and Android as well as hardware products such as its low-priced Chromebook laptops.

That was despite its raft of experiments, or “moonshots”, collectively racking up operating losses of $1.2bn in the quarter. Shares rose less than 1% on the report. Alphabet surged to a market capitalization of more than $547 billion as of Tuesday morning’s trading, besting Apple’s $529.3 billion, reports CNBC. This year the company is predicted to capture more than 30% of the mobile advertising market putting it well ahead of Facebook in this respect on 20%.

Advertisers pay Google only if someone clicks on their ad.