Prominent Investors Muse Over Possibility of Trillion Dollar Valuation For Google
It's a question that people have been asking themselves for decades now - which will be the first publicly traded company to command a trillion dollar valuation?
Back in the late '90s during the height of the "dot com bubble", investors and analysts breathlessly wondered which company would be the first to have a market capitalization of over $1 trillion. Would it be Amazon.com? Nortel? One of the feather light Internet companies that promised to change the world but ended up leaving us in just a few years?
When the "dot com bubble" collapsed in the late '90s, the talk of the "trillion dollar club" ceased for the time being. As the DJIA picked up steam during George W. Bush's second term in office, the talk shifted to a company like Exxon Mobil or Berkshire Hathaway being the first to have a valuation of over $1 trillion.
In late 2008, the financial markets collapsed and the idea of a company hitting a trillion dollar valuation seemed farcical. However, Apple Inc. really hit its stride during this period, and its valuation jumped on a near-daily basis. By the fall of 2012, it seemed inevitable that Apple would be the first to join the trillion dollar club.
Over the past year or so, Apple's meteoric rise has been stymied thanks, in large part, to a product line that has failed to energize investors. Barring the introduction of a game-changing product, it seems unlikely that Apple will add $450 billion in market cap anytime soon.
One name that has been bandied about over the past few weeks as it applies to companies with potential valuations of at least $1 trillion - Google.
Google's market capitalization is currently a little over $400 billion. They are the #1 search engine in the world by a landslide andalso own the #1 online video site in the world, Youtube.com. With ever-increasing amounts of original (and well produced, in some cases) content being uploaded to the site every day, Youtube is becoming an increasingly important online entertainment hub. Companies such as Disney have made major plays into the online video content market and Google will obviously be a beneficiary.
In addition, Google continues to work on things that may pay massive dividends for the company in the future. Google has a self-driving car that is actually being tested on the open road as we speak. What kind of an impact would it have on Google's valuation if the company provided the technology needed to operate self-driving cars throughout the world?
As is that wasn't enough, Google's forays into home products (via their acquisition of Nest) and robotics could end up propelling the company in completely different directions going forward.
Google doesn't seem intent on just sitting back and focusing just on their search engine technology. Instead, they are actively working on introducing new technologies into the world that could make the company even more powerful moving forward (many people are already uncomfortable with Google's level of importance in our day to day lives, but that's another story for another day).
If I had to bet on which company would be the first to command a trillion dollar valuation, I would say Google in a heartbeat (and no, I don't own shares in the company). Warren Buffett often says that if you think that a company will still be around in 25 years, they are probably a good investment. Not only do I think that Google will still be around in 25 years, but I think that they will be even more important and powerful than they currently are. If you think that Google is already powerful (how many times do you use one of their products every day?), just wait until they are also powering your cars and monitoring every aspect of your home.
Filed under: General Market News