Taking a look at the two rivals Apple and Google, it's fairly obvious that Google's primary revenue stream isn't in self-driving cars or making Nexus devices; instead, the company makes the lion's share of revenues from services. Apple provides a number of cloud services to its billion or so active users, and Piper Jaffray analyst Gene Munster believes that those services are overlooked and undervalued by investors.
Munster issued a note to investors this morning, pointing out that Google's shares trade at about 19 times the company's project 2017 operating revenue (excluding net cash). Applying that same ratio to Apple's shares, the value of services alone would be about $264 billion. At the present time, Apple's market capitalization is at about $590 billion, with about $160 billion of that in cash.
In his note, Munster stated that "Apple's current valuation seems to understate the value being created by the Services business, and we expect the awareness of this to grow over the next several quarters as Apple continues to give more detail on the segment." The company has been attempting to point this out to investors in past earnings reports, and hopefully investors will finally get the message.
Apple's 2Q 2016 Earnings Call will be held on Monday, April 25 at 2 PM PT/5 PM ET. We invite you to join us for our traditional earnings call meta-liveblog on Monday afternoon for commentary as the call is underway.