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Alphabet Becomes the Most Valuable Public Company in the World

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Re: Alphabet Becomes the Most Valuable Public Company in the World

#321

Post by microtherion »

tim333 wrote: post #285
czhiddy wrote: post #111

Earlier quoted context omitted.

If you add in the same comparison to Facebook's numbers, the valuations look even more puzzling (using the most recent quarter): * Apple's quarterly revenue: $75.9b * Apple's quarterly profit: $18.4b * Apple's market cap: $538.7b * Apple's P/E ratio: 10.24 * Google's quarterly revenue: $21.3b * Google's quarterly profit: $6.8b * Google's market cap: 517.6b (pre-earnings) * Google's P/E ratio: 35.37 (pre-earnings) * F…

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.

That's quite plausible, but they have a $319B market cap today, so current shareholders would see their stock flatline over those 5-10 years.

Re: Alphabet Becomes the Most Valuable Public Company in the World

#322

Post by ninkendo »

esun wrote: post #290
coldtea wrote: post #242

Earlier quoted context omitted.

And judging from the quality of those feeds, I'd call it AS (artificial stupidity) not AI.

Well it's smarter than running ads in newspapers, which generated a half-trillion dollars of revenue over a century.

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.

Re: Alphabet Becomes the Most Valuable Public Company in the World

#323

Post by msh »

Reedx wrote: post #319
toomanybeersies wrote: post #218

Earlier quoted context omitted.

Google's flagship product is an advertising platform, not a search box.

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.

If that was how they made most of their money, yes.

Re: Alphabet Becomes the Most Valuable Public Company in the World

#324

Post by jaxondu »

dschiptsov wrote: post #313

Valuation based entirely on hype and big names, without any released products or services?

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.

Re: Alphabet Becomes the Most Valuable Public Company in the World

#325

Post by _nedR »

stcredzero wrote: post #171
jasode wrote: post #153

Earlier quoted context omitted.

>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 fro…

- 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.

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?

Re: Alphabet Becomes the Most Valuable Public Company in the World

#326

Post by jonknee »

TheOtherHobbes wrote: post #270
magicalist wrote: post #125

Earlier quoted context omitted.

> 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 reall…

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…

> 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.

Re: Alphabet Becomes the Most Valuable Public Company in the World

#327

Post by ubernostrum »

taneq wrote: post #249
drewrv wrote: post #119

Earlier quoted context omitted.

AI is whatever hasn't been done yet https://en.wikipedia.org/wiki/AI_effect#AI_is_whatever_hasn....

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.…

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".

Re: Alphabet Becomes the Most Valuable Public Company in the World

#328

Post by whack »

jedberg wrote: post #81
whack wrote: post #76

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 actuall…

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.

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