Google Passes Microsoft in Market Cap, #2 in Tech Behind Apple

Shares of Google hit an all-time high on Monday, hitting another symbolic milestone in the process: Google passed Microsoft in market capitalization to become the world's second most valuable tech company.

Shares in GOOG ended the day at $761.78, a gain of $7.28 (+0.96 percent), on light volume of 3.2 million shares trading hands. That's a record closing high, and it gives the company a market cap of $249.1 billion.

As shown in the chart below, shares of GOOG have been on a tear since the middle of July, rising 34 percent since the stock closed at $570.48 on July 12th.

GOOG Chart

A One-Year Chart for $GOOG as October 1st, 2012
Source: Yahoo! Finance

Investors think that Google is well-positioned for competing in a modern world. Wedge Partners Corp. For instance, analyst Martin Pyykkonen told Bloomberg that, “The PC hardware business is obviously struggling, The transition here is pretty straightforward in terms of where things have moved to and certainly that’s cloud, that’s Web.”

With that as a backdrop, today's flip-flop with Microsoft could be seen as even more of a symbolic moment. Microsoft was once the world's most valuable corporation, but today the company is merely one more tech giant, possibly bordering on a has-been.

Shares of $MSFT ended the day at $29.49, down $0.270 (-0.91 percent), on moderate volume of 54 million shares trading hands. That gave Big Redmond a market cap of $247.2 billion. Apple first surpassed Microsoft's market cap in May of 2010.

We've seen a little chatter about Google's share price vis á vis Apple. At $761.78 a share, GOOG has a higher share price than AAPL, which ended the day at $659.39, down $7.715 (-1.16 percent)...

...which means precisely diddly squat when comparing the two companies. "Which stock will be the first to hit $1,000 a share?" is like asking which vehicle can hit 1,000 miles per hour first, an F-16 or the Space Shuttle. Both can do it, but the comparison is meaningless.

Apple has far more shares outstanding—937.4 million—than Google, which has 327 million shares. For that matter, Microsoft has 8.4 billion shares outstanding, also making a per-share comparison moot.

If you want to compare two companies, look at the market cap, not the per-share price. Apple's market cap is $618.1 billion, not quite two and a half times that of Google's market cap of $249.7 billion. Apple also has the lower P/E, at 15.68 (without excluding cash), compared to Google's P/E of 22.37 (also without excluding cash).

Speaking of which, Google still remains far behind Exxon Mobil, the world's second-most valuable company behind Apple. XOM ended the day at $91.80, up $0.350 (+0.38 percent), on light volume of 10.3 million shares. That gives the energy giant a market cap of $423.7 billion, comfortably ahead of Google and comfortably far behind Apple.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.