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Microsoft Surpasses Alphabet's Market Cap for the First Time in 3 Years

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Microsoft (MSFT - Free Report) ended Tuesday trading with a market capitalization of $753 billion, passing Google parent Alphabet (GOOGL - Free Report) in valuation for the first time in about three years. The software pioneer is now the third most valuable public company in the world, with Alphabet taking the fourth spot and Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) remaining at one and two, respectively.

Google and Microsoft regularly traded places in the market cap rankings throughout the years, but ever since the search engine leader shifted to the Alphabet umbrella structure in 2015, it has held a lead over the Redmond, Washington-based firm.

Shares of both companies declined on Tuesday amid market-wide volatility, which was seemingly spurred by political uncertainty in Italy. But Microsoft fared better during the selloff, dropping less than 0.5% compared to Alphabet’s nearly 1.5% slump.

Microsoft and Alphabet serve as bellwethers for the broader technology sector and compete directly in a number of key fields, including cloud computing, artificial intelligence, and consumer electronics.

It is also interesting to note how both brands have been forced to evolve their core businesses in recent years, with a decline in PC demand threatening Microsoft’s software business and a shift to mobile computing forcing Google to adapt.

Currently, both companies are Zacks Rank #3 (Hold) stocks. Microsoft surpassed EPS estimates by more than 11% in its most recent quarter, thanks in large part to strong cloud and subscriptions growth, and its full-year outlook has improved since then. In fact, our consensus estimate for Microsoft’s current fiscal year, which ends in June, has gained 28 cents over the past two months.

Meanwhile, consensus estimate for Alphabet’s full fiscal year have actually slumped in that time. Still, the company’s key growth catalysts—including its latest hardware initiatives and AI projects—should spur investor confidence in the near future.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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