Prediction: Alphabet Will Be a Larger Company Than Apple by the End of 2027

Right now, Apple (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are the world's second- and third-largest companies, respectively. Apple's market cap sits just under $5 billion, while Alphabet's is $4.2 billion. While that's not an insignificant gap, I think Alphabet could close it over the next year and claim the title of the world's second-largest company.

It won't be easy, but I think there are two fronts where Alphabet can make up ground.

Image source: Getty Images.

AI will get more positive reception

Apple and Alphabet are taking two completely different approaches to artificial intelligence. Apple really hasn't spent a whole lot on data centers or large language models, and has done almost nothing to develop its AI computing capabilities. In fact, it's planning to integrate Google Gemini into most of its products rather than spending heavily to develop its own AI model. While this may prove to be a genius strategy on Apple's part, it will limit its offerings to what Gemini is capable of.

Furthermore, Apple's AI features have been a bit lackluster. It has yet to launch a subscription AI service, and the next-generation Siri AI assistant was just launched with iOS 27. Time will tell how this pans out, but one thing is for certain: Apple is not going all in on AI.

But that may be its selling point as an investment.

At this point, it's the only big tech stock that isn't all-in on AI. As a result, it has become a bit of a safe-haven option for tech investors who want a hedge against AI exposure. As investors start to realize the payoffs and benefits of heavy AI investment, I think the sentiment that makes that desirable will change, but it explains why Apple stock has been so resilient over the past few months.

If this sentiment starts to shift in 2027, then Apple may not remain as attractive a stock as it is, as it's not growing all that fast.

GOOG Revenue (Quarterly YoY Growth) data by YCharts.

With Alphabet growing a fair bit faster than Apple, I think investors will start to realize how big of a deal AI is, and shift funds away from Apple.

Apple is valued at a premium

Relative to Alphabet, Apple is priced at a premium. To compare them, I'll use the price-to-operating-earnings ratio. It's the better metric right now because Alphabet's standard P/E metric has been skewed by the huge gains it has accrued from its investments in Space Exploration Technologies (NASDAQ: SPCX) and Anthropic. Going a bit further up the financial sheet to focus on operating income factors the impact of those investments out of the equation, measuring the two based on their earnings from their actual businesses.

GOOG Operating PE Ratio data by YCharts.

In the middle of this year, the companies were fairly in sync in terms of valuation. But a modest divergence has emerged. If they traded at the same valuation, Apple would still be slightly larger than Alphabet. Still, with Alphabet expected to grow much more quickly between now and the end of 2027, it will easily have higher operating income than Apple by then.

GOOG Operating Income (TTM) data by YCharts.

If Alphabet overtakes Apple in operating income generation, and if its valuation adjusts as the market takes a more positive view of the AI sector, I think Alphabet will overtake Apple in 2027 to become the world's second-largest company. To do this, it will likely need to deliver market-beating returns en route to a new all-time high, making Alphabet a great stock to buy now.

Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.