Sundar Pichai, CEO of Alphabet.
David Paul Morris | Bloomberg | Getty Images
Google’s parent, Alphabet, has reached a $ 1 trillion market cap, making it the fourth U.S. company to reach this milestone.
Apple was the first to reach the market cap milestone in 2018. Then Microsoft and Amazon followed. Apple and Microsoft are still worth over a trillion dollars, while Amazon has since fallen below the brand.
Analysts are optimistic about the company's newly appointed CEO, Sundar Pichai. In a surprising announcement in December 2019, Alphabet's founder Larry Page announced plans to step down as CEO along with co-founder and President Sergey Brin.
Pichai was already the CEO of Google, which spanned all of the company's core businesses – including search, advertising, YouTube and Android – and essentially generated all of its earnings and profits. But he reported Page, who also oversaw other companies that placed long-term bets on experimental technologies such as self-driving cars and package delivery drones. He is now responsible for the entire conglomerate, although Page and Brin still have control over most of the company's voting rights, which has a significant impact on key decisions.
Optimism also results from the company's growth in the cloud business, which was still far behind the leading company Amazon and the second-placed Microsoft, but its turnover rate between February 2018 and July 2019 from $ 1 billion to $ 2 billion per Quarter doubled Similar growth is expected over the coming year as the company continues to provide substantial resources, including tripling its sales force and strengthening the Google Cloud Health segment. However, the company faces challenges as it faces issues related to trust.
Some analysts have also noted the company's stabilized advertising business.
In December, Stifel raised its price target for Alphabet from $ 1,325 to $ 1,525, an increase of 14%. Google’s parent company’s shares rose nearly 1% after Bank of America raised its price target for Alphabet’s stock in January, including healthy advertising business for Alphabet.
That would be a reversal of recent trends: last spring, Alphabet closed its worst day since April 2010 after reporting slower advertising numbers. The stock fell 7.5%, saving more than $ 67 billion in market capitalization.
During the third quarter, the company failed to meet expectations for earnings per share and saw profit decline. The company's stock fell up to 4% after close of trading, but eventually recovered at 2%.
The company is also facing a number of cultural clashes, including a recent investigation by the US National Labor Relations Board and various state and federal anti-trust investigations.
With a valuation of around $ 620 billion, Facebook appears to be the next trillion-dollar technology competitor.
Alphabet reports fourth quarter and full year 2019 results on February 3rd.