Not so long ago, the world’s biggest company by market cap was Exxon Mobil. Then, a couple of years ago, it was overtaken by Apple, and the media made a big deal about it. Now it is in fourth place, behind Apple, Alphabet and Microsoft, but it may not be long before it is overtaken by Facebook and Amazon too.
The order at the top is changing, but there is no one reason.
Exxon Mobil’s share price has lost out as the oil price has fallen, but not by much, and maybe by not as much as you would have expected given the precipitous falls in the oil price – which has more than halved over the last two or so years. In June 2014, the Exxon share price hit $103 – an all-time high, this morning it stood at $90. Although in fairness, one should point out that it has been a volatile time for the stock, shares went close to $70 last autumn.
Apple in slow lane, but car can see it accelerate
Apple saw its share price rise this week, after announcing a 27% fall in net income. But the company said that the fall in iPhone sales was not being reversed, and market speculation on an Apple car and now an Augmented reality device, is also helping.
Alphabet enjoys mobile bonanza
Alphabet has seen its share price rise around $680 since last month to $740, although the share price has been higher before, peaking at around $776 last December. Alphabet saw net profits rise 24% in the latest quarter, hitting $4.88 billion, with mobile ads providing a big impetus, although the company did not breakdown the figures, so we don’t know the extent of the rise in mobile advertising.
Microsoft and augmented reality
The Microsoft share price is now at $56, not far off the all-time high set during the halcyon days of the dotcom boom. In its latest quarter, Microsoft saw revenues fall 7%, but the cloud part of the business is growing strongly, and there is growing interest in its HoloLens product.
Facebook, looking at video
Facebook enjoyed another impressive quarter, with ad revenue up 63% to $6.24 billion, and profits jumping a stunning 186%.
Both Facebook and Alphabet have been putting more emphasis on video, with Alphabet talking about 360 degree videos on YouTube, while Facebook boss Mark Zuckerberg is talking about video being “at the heart of all our services.”
Amazon’s silver lining
As for Amazon, while the media focuses on its drones, big sales growth is coming from its cloud business, revenue was up 31% in the latest quarter with Web Services seeing a 58% rise. Its share price has been on a sharp upwards trajectory for some time – the price has more than doubled in the last two years, and quadrupled in four years.
Buffett’s long-term play
As for Berkshire Hathaway, the company ran by the world’s most famous investor, Warren Buffett, what is impressive about this company is how the share price has risen over such an extended time-frame – it has doubled in five years, roughly quadrupled this century, but also increased roughly eight-fold in the 1990s. For so long, Buffett shunned tech, but he is now a big shareholder in Apple.
If recent trends continue, it won’t be long before the market cap of Amazon and Facebook exceed Exxon Mobil, it will be the age of the techs, although if Saudi Arabia’s Aramco is floated, its market cap may be bigger than Apple, Alphabet, Microsoft and Facebook put together.