Google parent Alphabet overtakes Apple to become new king of cash

The switch in leadership follows a conrted effort by the iphone maker to reduce its liquid reserves, six years after it first came under pressure from activist investor Carl Icahn to pay out more of its cash hoard. Apple’s holdings of cash and marketable securities, net of debt, has fallen to $102bn, down from a peak of $163bn at the end of 2017.

Alphabet’s financial reserves have been moving in the opposite direction. At $117bn, its cash pile has risen by almost $20bn over the same period.

The rise of Google’s parent to the top of the corporate liquidity rankings puts its corporate wealth and power on conspicuous display at a politically sensitive moment. After being hit with €8.2bn in antitrust fines to the EU in the past two years, it now faces intense scrutiny in Washington.

The company’s preference for hoarding its money and spending it on trying to break into new markets, rather than using it to reward shareholders with buybacks or dividends, as Apple has done, also antagonises some investors.

“In general, their attempts to reinvent themselves with their new initiatives aren’t working out,” said Walter Price, a portfolio manager at Allianz Global Investors. “I wish they’d return more cash to shareholders and waste less.”

Too much liquidity?

The cash build-up has come despite a surge in capital spending. At $25bn last year — up from around $13bn in 2017 — much of the money has been pouring into real estate, as Google has added to its office holdings in cities such as New York and built data centres to support its growing cloud computing business.