A few days ago, Apple became the first company in the world whose market capitalization exceeded $3 trillion. Is it a lot? A lot! There are only 6 countries in the world whose GDP exceeds 3 trillion – these are the USA, China, Japan, Germany, India and Great Britain. For comparison, the GDP of Ukraine is only $148 billion.
Yes, yes, we know that comparing the country’s GDP and the market capitalization of joint-stock companies is not worth it and is not even possible, it was only necessary to understand the level of numbers. So let’s first understand what it is, GDP and market capitalization.
What is market capitalization
Gross domestic product (GDP) is a summary of the production activity of all residents of the country in the field of material and non-material production. Roughly speaking, this is the total value of goods and services produced or provided by the country’s citizens during the year. GDP is a fairly tangible and realistic indicator of the strength of a country’s economy, and although services, unlike goods, are intangible, they have a definite value, equivalent in money, just like goods.
Market capitalization, on the other hand, is an intangible indicator. It depends very indirectly on the value of the goods produced by the company, revenues or profits, although it is clear that the stock of a company that produces only a few million dollars of goods cannot be worth trillions. Market capitalization of a joint-stock company is the current value of all its shares, the multiplication of the number of shares in circulation by their value on the stock market at a specific moment in time.
Many factors affect market capitalization, but one of the main ones is the expectations of investors, roughly speaking, their faith in the company, its future earnings, management stability, the correctness of the chosen path, etc. So, even if a company shows very good quarterly or annual earnings, but its activity is accompanied by scandals, the forecast for future earnings is uncertain, or the company does not have a clear development plan, then its market capitalization will decrease.
In addition, at different times, investors tend to invest in industries that have prospects for development. In the 19th century it was railways, at the beginning of the 20th century it was the mining of steel, coal, and oil. In the information age in which we now live, these are high tech. Therefore, it is not surprising that on the list of the 10 largest companies in the world by market capitalization, eight are IT companies, and the other two invest in information technology and business diversification. By the way, out of ten companies on the list, seven are related to video games in one way or another! And no, most of them for various reasons are not on the list of 10 largest gaming companies in the world.
The market capitalization of all companies at the time of writing is provided by Companiesmarketcap.com, which in turn takes the numbers from Yahoo Market applications. Market capitalization is constantly changing, at the time of writing several companies at the bottom of the list have changed places. The article records the situation as of July 5, 2023, 21:00 Kyiv time.
And now let’s count other people’s money, it’s so exciting!
1. Apple (AAPL)
Year of establishment 1976
Industry consumer electronics, software, online services
Market capitalization $3.022 trillion
Although we noted a little above that the market capitalization is very indirectly dependent on the cost of goods, revenues or profits of the company, in the case of Apple these are related things. Apple is the largest technology company in the world by revenue – $394.3 billion in 2022, but only 7 in the overall list. Apple is the second most profitable company in the world – $99.80 billion in 2022 after taxes. It is the fourth- largest PC manufacturer in the world and the second-largest smartphone manufacturer in the world.
On the other hand, Apple is always a bit about faith, both about the faith of users in the company’s future products, and about the faith of investors in the faith of users who will not betray the manufacturer. Yes, investors’ expectations are not always rational considerations.
As we all know, Apple was on the verge of bankruptcy in the late 1990s, but the return of Steve Jobs and his vision for the future of the company saved Apple. What happened next is generally known – a revolution in laptops, a revolution in smartphones, a bet on services. Looks like it worked.
Year of establishment 1975
Industry software, online services, games
Market capitalization $2.534 trillion
Founded with a difference of one year and three days, Apple and Microsoft have been competing for almost 50 years. Especially during the time of Jobs and Gates in the management of companies. Recently, Apple has been leading, but Microsoft, which seems to have lost the smartphone and tablet battle, has recovered and is doing very well without mobile devices.
Microsoft is almost a monopoly in the market of user operating systems and office software; does well in the server and cloud market; strengthens its position on the search engine market and successfully experimenting with AI. Well, despite “losing the console war”, Microsoft takes second place in the game market .
Like many other IT companies in early 2023 Microsoft fired 10,000 employees while investing money in ChatGPT developers OpenAI. It is with AI that the next round of technology development is associated. Investors seem to believe it.
Country Saudi Arabia
Year of establishment 1933
Industry oil and gas production
Market capitalization $2.087 trillion
The first non-IT and the second oldest company on the list. Saudi Aramco was founded by private investors from the United States and the government of Saudi Arabia in 1933 as California-Arabian Standard Oil (CASOC). In 1944, it changed its name to Arabian American Oil Co. (or Aramco). In the second half of the 20th century, the government of Saudi Arabia gradually bought back the company’s shares and in 1988 created the Saudi Arabian Oil Company, which gained control over 100% of Aramco’s assets. So now it is a 100% government company.
Saudi Aramco is the world’s second-largest company in revenue after Walmart – $535.188 billion (2022) and the world’s first in terms of profits – $161.068 billion (2022). Also, since 1965, Saudi Aramco is the world’s largest (among companies) producer of carbon dioxide and other greenhouse gases, which is responsible for 4% of all global emissions.
Of course, Saudi Aramco tries to whiten its reputation by investing in green and image (for example, Aston Martin Aramco-Mercedes) projects and talking about reducing environmental damage, but they are not really believed. The company is also accused of neglecting workers’ rights and human rights in general.
Year of establishment 1998
Industry software, search, online services, advertising
Market capitalization $1.554 trillion
The story of the creation and rise of Google has been told so many times that there is no point in repeating it. Undoubtedly, the modern Internet and the world would not be the same if Google had not revolutionized search in the late 1990s. Those who still owe the Internet to Google will not be lied to.
Alphabet Inc., which was created in 2015 during the reorganization of Google, is the parent company of Google and some (but not all) of its divisions. In 2022, Alphabet earned $282.8 billion and had a profit of $59.97 billion after taxes. Google/Alphabet derives most of its revenue from advertising on its sites and apps and continues to experiment with new technologies, competing with Apple and with Microsoft (with Amazon and Meta actually too).
Like many other IT companies in early 2023 Alphabet laid off 12,000 workers (6% of total). In addition, Alphabet is slightly behind its competitors in the field of AI, although it had every chance to be one of the first.
Year of foundation 1994
Industry e-commerce, online services, streaming
Market capitalization $1.337 trillion
Few people now remember that Amazon was originally called Cadabra, Inc. and dealt exclusively with paper books. It is now an online shopping giant and one of the largest employers in the world, second only to Walmart (US supermarket chain) (2,300,000) and the armies of China (2,035,000) and India (1,455) in terms of number of employees (1,541,000). 550).
Amazon has been doing more than just books for a long time. Now it is a manufacturer of smart electronics and the largest server capacity in the world. Amazon Web Services holds 33% of the market, while Microsoft Azure and Google Cloud have 21% and 10%, respectively. And there are Ring smart doorbells, Twitch game streaming service, Amazon Prime Video streaming service, and more.
Amazon even tried to deal with video games, licensed the CryEngine engine from Crytek and created its own Amazon Lumberyard engine based on it. But there was no problem with games, Amazon Games can only be remembered for the MMORPG New World… and that’s it.
In 2022, Amazon earned $513.98 billion but had a loss of $2.72 billion after taxes, so the company’s shares are a bit feverish.
Year of establishment 1993
Industry software, streaming
Market capitalization $1.052 trillion
NVIDIA was founded 30 years ago over lunch at a roadside cafe by three engineers who worked at AMD, Sun Microsystems and IBM. In 1993, the three co-founders believed that the next wave of computing would be the acceleration of graphics-related computing. Of course, they looked at the video games and guessed. The company’s first video card, the NVIDIA NV1, was released in 1995, and in 1998, the RIVA TNT2 made NVIDIA the market leader.
NVIDIA is not only about games for a long time. NVIDIA is the world’s fastest supercomputers for scientific computing, cryptocurrency mining, game streaming, portable gaming devices, and more. In 2020, NVIDIA also tried to acquire Arm for $40 billion, but US regulatory authorities blocked this deal.
Recently, the company presented unique products with artificial intelligence and this is what seems to have interested the investors who helped NVIDIA get into the list of the companies with a capitalization of more than $1 trillion.
7. Tesla (TSLA)
Year of establishment 2003
Industry car manufacturer
Market capitalization $885.91 billion
Tesla, Inc. (until 2017 Tesla Motors) is not only cars, but also solar panels (Tesla Energy, formerly SolarCity) and energy storage systems, and recently also humanoid robots.
People can feel differently about Elon Musk, especially after his “innovations” on Twitter, but it’s hard to overestimate what Musk has done for electrification of the auto industry. In 2006, when the Tesla Roadster (the first generation) was presented, automakers laughed at Tesla and did not believe that they would be able to set up mass production of cars. Currently, Tesla produces 1,369,611 cars per year (2022) and opens a new factory every year, and in 2022 even two, in Germany and the USA (Texas). Tesla’s seventh factory – Gigafactory Mexico – is being built in Mexico and is supposed to produce the next generation of cars.
Tesla’s revenue for 2022 amounted to $81.46 billion, profit after tax – $12.56 billion. We will remind you that Tesla became profitable only in 2020, and at that time few believed that Musk’s company would be able to make money.
Year of establishment 2004
Industry social network, software
Market capitalization $759.78 billion
The story of the creation of Facebook is well known, there was even a movie made about it. It was this company that started the era of social networks, fake news, political manipulation, post-truth, etc. On the other hand, at one time Facebook played an important role in the events of the Arab Spring and the Revolution of Dignity.
Due to the intransparent moderation policy since the beginning of the full-scale war, Ukrainians do not like Facebook but continue to use it. As with other Meta Platforms products: Instagram, WhatsApp and Messenger.
And although Mark Zuckerberg’s fascination with the idea of a “metauniverse” has caused the company no harm, Meta Platforms continues to make good money, of course, from advertising, which brings the company 97.5% of revenues (2021). In 2022, Meta had $116.61 billion in revenue and $23.20 in profit after tax. A controlling stake in Meta is still owned by Mark Zuckerberg.
Along with Alphabet (Google), Amazon, Apple and Microsoft, Meta (Facebook) form the so-called “Big Five” of IT companies that have almost all the hallmarks of the same megacorporations that rule the world in cyberpunk books/games.
Year of establishment 1839
Industry holding company
Market capitalization $743.08 billion
Berkshire Hathaway was founded by Oliver Chase in 1839 as a textile company called the Valley Falls Company. It received the name Berkshire Hathaway in 1955 after the merger of Berkshire Fine Spinning Associates (with Valley Falls Company as part) and Hathaway Manufacturing Company, both involved in textiles.
In 1962, 32-year-old businessman Warren Buffett bought Berkshire Hathaway shares. But very quickly he realized that the textile industry was declining, and the company was going to the bottom. In 1967, Buffett began to invest money in other activities, primarily in insurance, and in 1970 he turned Berkshire Hathaway into a holding company. The last textile factory of the company ceased operations in 1985.
Berkshire Hathaway invests money in a surprisingly diverse range of activities. The company owns shares: sports shoe manufacturer Brooks Sports (100), website Business Wire (100), battery manufacturer Duracell (100), electric company PacifiCorp (92), food manufacturer Kraft Heinz (26.53%), financial American Express service (20.26%), Bank of America (12.73%), computer and printer manufacturer HP Inc. (11.82%), Activision Blizzard (9.49%), The Coca-Cola Company (9.24%), Chinese car manufacturer BYD Company (7.79%), Apple Inc. (5.63%), General Motors (4.28%), Liberty Media Formula One (3.8%) and dozens of other companies.
Warren Buffett, who is already 92 years old, still manages Berkshire Hathaway. He lives in a very modest house, drives a car that is almost 20 years old, eats hamburgers with Bill Gates in a small diner and is going to give away 99% of his $114.4 billion fortune to charity (No. 6 on the Forbes list).
10. TSMC (TSM)
Country Republic of China (Taiwan)
Year of establishment 1987
Market capitalization $526.21 billion
Taiwan Semiconductor Manufacturing Company Limited, or TSMC, is the world’s largest semiconductor manufacturer and Taiwan’s largest company. TSMC was created under the patronage of the Executive Yuan of the Republic of China (Taiwan’s highest executive) and personally Li Kwoh-ting, the economist and politician best known as the “Father of Taiwan’s Economic Miracle”. In the initial stage of transformation into a technology country, only Philips helped Taiwan by investing in TSMC.
TSMC produces processors for companies such as AMD, Apple, ARM, Broadcom, Marvell, MediaTek, Qualcomm, NVIDIA and even Intel. The company was the first in the world to switch to the 7-nm and 5-nm technological process, now produces chips using 3-nm technology and plans to master the 2-nm technological process in 2024.
TSMC has more than 20 factories in different parts of the planet, but most of them are located in Taiwan. That is why threat of PRC invasion can put the whole world on the verge of “processor hunger”, which, of course, worries the leaders of the world’s leading countries, which are diligently investing in the construction of microchip factories on their own territory.
In 2022, TSMC generated $75.81 billion in revenue and posted an after-tax profit of $34.08 billion.
Every technological era has its favorites. The oil companies that occupied the top rankings of the world’s most valuable companies in the 1970s have now dropped to the second or third dozen, except for Saudi Aramco, of course. Who knows, maybe today’s leaders will give way in the coming years to companies dealing with AI, or android robots, or asteroid mining, or anti-aging drugs. Let’s come back to this list in a few years!