Google’s parent company Alphabet has reached a trillion-dollar valuation, making it the fourth US company to achieve this.
The company hit the milestone on Thursday evening as its share price reached $1,450.16.
Over the last two years Apple, Microsoft and Amazon have all reached a market cap of $1tn, but Amazon has since dipped below this, with a current valuation of $930bn.
Alphabet’s shares jumped 30% in 2019 and increased by 17% in the last three months.
“One of the most important companies of the 21st century”
Alphabet’s revenue streams come from many different sources, from online advertising – which makes up the majority of its revenue – voice assistants, smartphones, and cloud computing, to more recent investment in machine learning, healthcare and driverless car startup Waymo. Alphabet was founded in 2005 following a restructuring of Google, in which it became the parent company.
John Warner, the senior marketing executive here at Click Consult believes that the company has expanded due to its willingness to invest in a range of areas:
“Google hasn’t been a search engine for a long time; it’s a tech company at the cutting edge and a search engineer structuring the data of the whole planet. This places it in a relatively unique position; it has the potential and the capacity to be one of the most important companies of the 21st century.”
The company has conquered a wide range of markets, with Christopher Rossbach, the CIO of the private investment firm J Stern & Co telling the Guardian that disrupting lucrative market such as healthcare, with Google recently acquiring Fitbit for $1.2bn, could see it become “a $2tn company in the near future”.
Eoin O’Neill, CTO & Global Head of SEO at Tug said:
“Google’s continued stock rises are due in part to the company’s ability to continually develop new areas of growth. Google has a proven successful approach to developing products that integrate within its portfolio. However, there is always the need to squeeze more revenue out of each product. For example, the increased level of advertising in YouTube and monetisation through platform subscriptions. It will be interesting to see if Google can resist the temptation to monetise search results outside of the traditional pay-per-click advertising model.”
However, the company has faced growing scrutiny from regulators in some areas of the world, with a fine of $1.7bn fine from the European Union last year for antitrust violations, and its use of user data increasingly called into question.
Democrat presidential candidates Elizabeth Warren and Bernie Sanders have pledged to break up technology giants such as Google for their monopoly of certain industries.
Furthermore, Google has also faced unrest from within the organisation, with some Google employees protesting against sexual harassment within the company and voicing concerns over Google’s involvement in Project Maven.
Does Alphabet reaching a trillion matter?
According to MarketWatch, getting a truly complete picture of Alphabet’s valuation is somewhat difficult, with the company not disclosing the finances of Youtube, which was bought by the company in 2006, and subsidiaries such as Waymo whose full success will only become apparent over the next few years as driverless car technology is more widely adopted.
Although a significant milestone which may encourage investors, it is unlikely that reaching a trillion will dramatically alter day-to-day business at Google, with high valuations like this likely to soon become standard fare for the Silicon Valley giants.
However, it does bring home just how large these companies are getting, with Facebook, Google, Microsoft, Amazon and Apple now having a combined valuation of over $5tr, according to CNBC, at a time when concern over their influence continues to grow.
When Apple reached a trillion back in July 2018, managing partner and co-founder of private equity firm Esperance Private Equity Robin Lee Allen told Verdict:
“For a time this will be a very prestigious event for whatever company reaches the milestone first. In the long run it won’t mean very much at all. Who remembers what the first billion-dollar company was?”