Scrolling through instagram, on my android, I read about how Apple is the world’s largest technological company for the second consecutive year as well. The number of zeros in Apple’s brand value did a number on my brain. Curious to know what the rest of the contenders looked like, I fell into the rabbit hole of obsessing over the number of zeros that the cream of the tech companies in the world were worth.
The A-list
We are in an era where innovation is the currency of progress. In a time as such, a select group of companies have risen to the forefront, carving out their spaces as the undisputed giants of the technological landscape. From the sleek devices that fit into our pockets to the vast digital infrastructures that underpin our world, these tech behemoths stand as the architects of our digital future. Unsurprisingly, most of the names that sit in the frontlines are ones that have become commonplace. A clear measure of the impact they have and the grip that they hold.
Of course the harbinger of sleek design and cutting-edge technology is Apple Inc. With a market capitalization of 2.75 trillion U.S. dollars as of May 2023, Apple secures the first place.
Market capitalization (or market cap) – a term that is often confused with market value – is the worth of a company often calculated by multiplying its current stock price with the total number of its outstanding shares. This is a crucial measure for comparing companies and identifying potential trading prospects.
If we dig deeper into the cash that Apple Inc. has on their balance sheets as of August 2023, they hold an impressive cash reserve of US$ 167 Bn. This substantial financial safety net is a result of its wide-ranging sources of income. These include sales of hardware like smartphones and computers, profits from digital services such as the App store and Apple Music, and revenue generated from subscription-based offerings such as Apple TV+. This diverse revenue approach has propelled Apple into the rank of the most valuable company, globally.
It goes without saying that reaching a US$ 1 trillion valuation marks a significant milestone for a publicly traded company. This accomplishment is rare, with only a handful of companies attaining such a remarkable market capitalization. However, it does not come as a surprise that most of these achievers are prominent technology entities that possess widespread ownership among investors.
With Apple already in the lead, an ambitious target of stocks reaching a remarkable US$10 trillion valuation has already been set. While this may be too bold, it is vital not to forget that the inaugural US$ 1 trillion valuation, which seemed like a dream, was realised merely in 2018.
Closely following Apple Inc., other tech companies that are spearheading the journey towards a monumental valuation are Nvidia (NVDA), Alphabet (Google), Microsoft Corp and Amazon.com Inc.
Nvidia Corp with its most recent entry to this trillion dollar club has turned many heads. In May 2023 it accomplished a great feat by becoming the first ever chipmaker to ascend to the trillion dollar tier of Wall Street. This prestigious club has historically been the domain of technological mammoths such as Apple and Microsoft.
The surge in demand for AI technology has been a driving force behind Nvidia’s stock valuation, resulting in an astonishing threefold increase in its value in less than eight months. This achievement of reaching the trillion dollar milestone arrived approximately 24 years following its initial public offering. Thereby outshining Apple Inc, who took 38 years to attain the same valuation.
While Nvidia is a new name, one of the oldest members is Alphabet Inc, Google’s parent company. It sits on a cash reserve of US$118 Bn.
The majority of its revenue originates from its presence in the realm of online advertising, primarily facilitated by platforms such as Google Search and Youtube. In conjunction with this, Alphabet’s diversification in other sectors including cloud computing, the development of hardware products like Pixel smartphones, and ambitious moonshot projects, all play important roles in determining its financial strength.
As of July 2023, according to an article published on ‘Best Stocks’, a report published by Robert W.Baird, has revised Alphabet Inc’s target price upward, moving from $123.00 to $130.00. This adjustment suggests a potential increase of 8.24% in comparison to the company’s previous closing price.
What is even more impressive is that on April 25th, the technology conglomerate unveiled its first-quarter’s financial results, which showcased impressive performance. They revealed an earnings per share (EPS) which amounted to $1.17, exceeding the estimate of analysts by $0.11.
And then, we have these tech rockstars …
An absence of mentioning Microsoft is like serving a French dish without wine in this particular listing of the rockstars of the technological field.
Microsoft, a trailblazer in the discipline of software and computing, holds an impressive cash reserve of US$ 111 Bn. The company’s portfolio is marked by its diverse array of products including the iconic Windows, and a lineup of hardware devices exemplified by the Surface series. This expansive spectrum has endowed Microsoft with a sturdy financial foundation, enabling the company to remain resilient.
The investment bank Morgan Stanley has conducted a study and predicted that Microsoft has the potential of becoming extremely valuable in the future, with a worth of US$ 3 trillion. This would put Microsoft in the same league as Apple, which recently achieved a valuation that is close to the amount. As per Morgan Stanley, Microsoft’s stock is considered a strong choice for investors, as they believe its value could increase by around 22% from its current price.
The reason behind this positive prediction? Microsoft’s firm footing in the field of generative AI. By the looks of it Microsoft is certainly not going soft on its peers.
Another best-in-class tech titan that needs a mention is Amazon.com. Despite the fact that in terms of cash reserves, Samsung Electronics Co. is ahead with a number of US$ 83 Bn in comparison to Amazon.com Inc’s US$64 Bn, when it comes to valuation, the latter is a member of the trillion dollar club.
Most of Amazon’s money comes from its huge online store. But a considerable inflow of cash also comes from Amazon Web Services (AWS), which is a part of the company that provides technology and computing services to other businesses.
Its financial results for the quarter ending in June indicates that they made a profit of 65 cents for each share of their stock, and their total sales were US$ 134.4 Bn. This was a mile better than what the experts had forecasted, where according to their polls Amazon was said to earn only US$ 131.5 Bn. Amazon’s achievements are nothing short of amazing.
While some of these numbers may appear surreal, what those very same numbers illustrate is that the innovations of these tech moguls drive economies and act as financial buttresses of the society. The influence that they have on the world is a captivating saga to watch, one that we are tempted to keep constant tabs of.
(Sandunlekha Ekanayake)