Apple's quarterly profit is nearly half of Google's quarterly revenue.
These companies have a very similar valuation.
Is the proper way to interpret this that investors are a lot more optimistic about Google's future vs Apple's?
They continually grow, make a boatload of money every quarter, and pay a good dividend.
For reference, P/E Ratios:
AAPL 18.26
GOOG 38.9 MSFT 63.9 FB 35.8 AMZN 350.9 IBM 36.6 HPE 66.7 NFLX 211.9
The easiest way to illustrate this is to imagine they had 1 trillion in cash instead of 280 billion. Their market cap would go up 720B meaning their PE would increase.
Conversely, if their cash decreased so would their PE.
14,776
Also there's a pretty good argument that the PE is a useless ratio that should be actively ignored, they haven't correlated strongly with anything in like 20 years.
I also find it questionable whether 18.26 is a "low" P/E. I still think of 15 as a normal P/E for the whole market. Although perhaps we will have low interest rates forever.
Otherwise, I don’t quite get which cycles you are referring to.
P/E right now is 23.3 for the S&P, 27.8 for the Nasdaq, and 27.7 for the Dow.
I also think that it is reasonable to consider that the whole market might be overvalued, given that nobody can predict the future and we are at historic lows with regard to interest rates. So it isn't outrageous to consider a historical average P/E for reference, rather than the average P/E right now.
Investors may be wrong of course.
I've read institutional investors don't see Apple having sufficiently diversified revenue streams to warrant a higher P/E. Something around 60% of their revenues come from iPhone alone.
Not much in total percent terms because of how huge the ads business is, but if you look at it on its own, that's up 50% and $5 billion YoY.
Apple is laughing all the way back to private ownership.
iPhone unit sales actually declined for Apple YoY.