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Google Passes Microsoft in Market Cap – Changing of The Guard?

Today marks the first day when Google [NASDAQ:GOOG] has surpassed Microsoft [NASDAQ:MSFT] in terms of market cap. Many publications will go around saying that Google is now bigger than Microsoft in terms of value, however, this is not an accurate representation of the truth, because market cap is purely a representation of the stock’s value multiplied by the current share price. Share price does not accurately represent a company’s value as in many cases, a company’s share price is artificially inflated.

We do, however, believe that Google passing Microsoft in terms of market cap signifies a changing of the guard to a certain degree. We believe that the change of guard really happened quite a while ago, but some things got in the way of letting Google’s share price to rise to a point to represent that change. If you look at Microsoft’s current market, they make the majority of their profit off of their Windows and Office businesses as well as off of the Xbox. When you consider that many of the lower-end sales of PCs have been gobbled up by smartphones, mainly dominated by iOS and Android, it seems to make sense that Google’s stock could surpass Microsoft’s in value.

In addition to that, Microsoft is still struggling to really take much, if any, search engine share away from Google. Apple has tried to do this with the adjustment of their Siri and Maps applications towards less Google searches, but it appears to have hampered the user experience more than anything. The truth is that Google is without a doubt one of the tech titans nowadays and they really have been for quite some time, today just is a confirmation of that. What Google will struggle with, however, is to maintain their current momentum and not be bogged down by their own size as many huge tech companies before them have been. They need to remain nimble and able to adjust to the changing tides of innovation, otherwise, they may find themselves like Blackberry or Nokia, struggling to survive.