Google parent Alphabet has overtaken Apple to become the world’s most valuable publicly traded company after reporting stronger-than-expected quarterly results, a symbolic shift in Silicon Valley that highlights the diverging fortunes of two businesses that dominate modern computing.

Alphabet’s shares rose after the company reported fourth-quarter revenue of $21.3 billion, up nearly 18 percent from a year earlier, and adjusted earnings above Wall Street expectations. The gains pushed Alphabet’s market value above Apple’s, which has been under pressure since the iPhone maker warned last week that quarterly revenue is likely to decline for the first time in more than a decade.

The crossover may prove temporary because market values move every trading day, but it carries unusual significance. Apple became the defining technology company of the smartphone era through the iPhone. Google became the dominant gateway to information and digital advertising. For the moment, investors are valuing Google’s advertising machine and future technology bets more highly than Apple’s hardware empire.

Mobile Advertising Drives the Core Business

Alphabet’s results show that Google continues to translate the shift from desktop computers to smartphones into higher advertising revenue. The company said advertising sales reached roughly $19.1 billion in the quarter, while paid clicks increased sharply.

For several years, investors worried that mobile search would be less profitable because smaller screens offer less space for advertisements and because advertisers might pay less for mobile clicks. Google has responded by redesigning ad formats, improving targeting and expanding the role of location and shopping information in search results.

The result is a business that continues to grow even as internet use moves away from desktop browsers. More people are searching from smartphones, watching video on YouTube and interacting with Google services throughout the day.

Chief Financial Officer Ruth Porat said increased use of mobile search, momentum at YouTube and programmatic advertising all contributed to the quarter. Those trends reinforce Google’s position at the center of digital advertising, where the company and Facebook increasingly capture a large share of new spending.

Alphabet Reveals the Cost of Its ‘Other Bets’

The earnings report also marks the first time investors can clearly separate Google’s established businesses from the experimental projects housed elsewhere in Alphabet.

Google includes search, advertising, YouTube, Android, Chrome, Google Play and related products. Alphabet’s “Other Bets” include projects such as self-driving cars, the Nest connected-home business, high-altitude internet balloons, life-sciences ventures and other research programs.

The separation was one of the main reasons Google reorganized as Alphabet last year. Executives said the holding-company structure would allow each business to operate with greater independence while giving investors more transparency about costs.

The new reporting shows just how expensive those experiments are. Other Bets generated relatively modest revenue while producing operating losses of several billion dollars over the year. Yet investors reacted positively because the losses were not larger than feared and because Google’s core business remains highly profitable enough to finance them.

Search Profits Fund Ambitious Technology

The Alphabet structure rests on a simple economic model: Google’s advertising engine produces cash that can be reinvested in technologies that may take years to mature.

Self-driving cars are perhaps the most prominent example. Google has tested autonomous vehicles on public roads and argues that computer-controlled driving could eventually reduce crashes, expand mobility and change transportation. The project has not yet become a commercial business, but Alphabet can continue funding it without relying on outside capital.

Other projects pursue healthcare, artificial intelligence, internet access and smart-home technology. Some may fail. The company’s willingness to tolerate that possibility distinguishes Alphabet from businesses judged primarily on near-term product cycles.

Investors are currently rewarding that approach because the core Google operation is still growing rapidly. If advertising growth slows, however, shareholders may become less tolerant of large losses from speculative ventures.

Apple’s Slowdown Creates the Opening

Alphabet’s rise to the top of the market-value rankings is partly about its own performance and partly about Apple’s recent weakness.

Apple reported record quarterly profit last week but said iPhone sales barely increased from the previous year and warned that revenue in the current quarter will likely decline. The iPhone accounts for most of Apple’s revenue, so any sign of saturation raises questions about future growth.

Apple’s market capitalization reached more than $700 billion last year, far above every other U.S. company. Its decline since then has narrowed the gap dramatically while Alphabet shares have risen.

The contrast is striking. Apple’s business depends heavily on consumers buying expensive hardware, often through replacement cycles. Google’s revenue is tied to advertising activity that can grow as people spend more time online even if they keep their phones longer.

That does not mean Google has no hardware dependence. Mobile search relies heavily on Android devices and Apple’s iPhone, where Google pays for distribution. But the company does not need to persuade users to buy a new Google-branded device every year to generate search revenue.

YouTube Becomes a Larger Strategic Asset

YouTube is another major source of optimism. Online video consumption continues to expand, particularly on mobile devices, and advertisers are shifting portions of television budgets toward digital video.

Google has invested heavily in improving YouTube advertising formats, measurement and creator tools. The service attracts enormous global audiences and gives Alphabet a position in entertainment that extends beyond traditional search.

The challenge is monetization. Video requires significant infrastructure, content moderation and revenue sharing with creators. Google has not disclosed full standalone YouTube financial results, making it difficult to judge profitability.

Even so, executives repeatedly cite YouTube as a major driver of advertising growth. If the service continues capturing viewing time from television, it could become an increasingly important part of Alphabet’s valuation.

Market Value Is Symbolic, Not Permanent

Alphabet’s title as the world’s most valuable company may not last. The two companies are close enough in capitalization that a few percentage points of stock movement can reverse their positions.

Apple remains extraordinarily profitable, holds an enormous cash balance and operates one of the world’s strongest consumer brands. Alphabet remains dependent on advertising for the overwhelming majority of revenue and faces regulatory scrutiny over its dominance in search and data collection.

The comparison is therefore less useful as a permanent ranking than as a snapshot of investor expectations. Markets are currently assigning Alphabet a higher value because they see stronger near-term growth and believe its advertising business can finance new opportunities.

Apple, by contrast, is being asked to prove that it can grow beyond the extraordinary iPhone cycle that made it the world’s largest company.

A New Technology Leadership Contest

The transition also reflects how quickly leadership changes in technology. IBM, Microsoft, Apple and now Alphabet have each occupied positions of extraordinary influence during different computing eras.

Google’s rise began with web search, expanded through advertising and Android, and now reaches into artificial intelligence, cloud computing, autonomous vehicles and connected devices. Apple’s rise came through tightly integrated consumer hardware and software, beginning with the iPod and accelerating dramatically with the iPhone.

The two companies remain interdependent as well as competitive. Google services are widely used on Apple products, while Apple receives revenue from making Google the default search engine on its devices.

This week’s market-cap shift does not declare a winner in that rivalry. It does show where investor confidence currently rests. Alphabet has demonstrated that its core advertising engine is still expanding and that it can afford to fund ambitious experiments. Apple remains powerful but faces a more immediate question about slowing smartphone growth.

For the first time since Apple established a commanding lead, Google’s parent company has moved ahead. Whether Alphabet can stay there will depend on whether mobile advertising keeps growing and whether some of its costly bets become real businesses rather than permanent research projects.