The recent race for the title of the world's most valuable company is a tumultuous one. NVIDIA made headlines as the new most valuable company in the world, but it's a three-way race involving tech giants Microsoft, NVIDIA, and Apple.
Although NVIDIA held 1st place for a few days, on June 21, 2024, Microsoft regained its position at the top with a market capitalization of $3.342 trillion, followed closely by Apple at $3.181 trillion and NVIDIA Corporation at $3.113 trillion. Although it seems like a small difference on paper, in reality these are differences of billions of dollars!
This shift occurred after NVIDIA, which had briefly held the top spot since June 18, 2024, saw its market value plummet by more than 3%, driven by a massive $220 billion selloff. Despite the temporary setback for NVIDIA—whose stock had nearly tripled over the past year due to its dominance in AI chip manufacturing—Microsoft managed to hold on to its lead.
The broader range of products and services that Microsoft offers in software and cloud computing, along with an anticipated 16% growth rate, has bolstered investor confidence and contributed significantly to its high valuation.
This article will go over the 8 most valuable companies in the world and their values - with 7 out of 8 being worth over $1 trillion.
Why Most Profitable and Most Valuable Aren't Synonymous?
The most profitable companies are those with the highest difference between their revenues and expenses. Profit is essentially what the company "takes home" after all taxes and expenses are paid. In this case, Saudi Aramco is the most profitable company in the world, as they had almost $250 billion dollars in profit in 2023. NVIDIA, for example, "only" had a profit of $27 billion in 2023, which is a HUGE difference from Saudi Aramco, even though NVIDIA is considered more valuable.
On the other hand, the most valuable companies are assessed based on a broader set of criteria, including future earnings, market share, and other factors. This means that value can change quickly, especially if the market goes up or down.
Market capitalization, or market cap, is calculated by multiplying the current stock price by the total number of outstanding shares. For instance, a company with 2.34 billion shares selling at $66.66 per share would have a market cap of $156 billion. Investors use market cap to quickly estimate a company’s overall value and compare it with others.
Market cap is popular because it’s easy to calculate and reflects market perception by incorporating investor sentiment and growth expectations. It also aids in comparing companies of different sizes and industries and generally correlates with liquidity. However, the market cap alone doesn't paint a comprehensive picture of a company’s value or financial health. Other valuable metrics include:
Enterprise Value (EV) – A more inclusive measure that combines market cap with debt and subtracts cash.
Revenue and Earnings – Indicators of the company's operational success and profitability.
Price-to-Earnings (P/E) Ratio – Compares share price to earnings per share, helping to evaluate if a stock is overvalued or undervalued.
Book Value – Represents net asset value, useful for assessing asset-heavy companies.
While market cap is essential for identifying the most valuable companies, it should be assessed alongside other financial indicators for a fuller understanding.
8 Most Valuable Companies in the World
Courtesy of: companiesmarketcap.com as of June 21, 2024
1. Microsoft ($3.342 trillion)
Microsoft's growth has been remarkable; in January, they surpassed Apple as the most valuable company, ending Apple's long-standing lead. And just recently, it has reclaimed the top spot as the most valuable company in 2024 against NVIDIA closing at a $3.342T market cap.
This achievement was influenced by the drop in Nvidia's stock price, which allowed Microsoft to regain the lead. Stock prices fluctuate based on investor confidence, the company's financial performance, the economy, and significant news.
Microsoft's diverse business portfolio, which includes cloud services, business software, and consumer technology, contributes to its steady income, even when one area underperforms. This diversity helps maintain its overall market value, demonstrating the importance of having varied business operations.
Microsoft shares are currently up by about 20% this year, largely benefiting from the AI boom. The company's significant stake in OpenAI and integration of AI models into its key products, including Office and Windows, has played a major role in this rise.
Furthermore, Microsoft is a leading buyer of Nvidia's GPUs for its Azure cloud service and recently released AI-optimized laptops, branded Copilot+. By integrating OpenAI's technology, such as ChatGPT and Copilot, into its productivity suite, Microsoft has revitalized its cloud business. This strategic move cements its status as a tech titan with a rich history and impressive plans.
Whether Microsoft will hold the top position for long is uncertain, as Nvidia or Apple might reclaim it. Time and company performance will determine future standings.
2. Apple ($3.181 trillion)
Apple shares fell 1.04%, giving the iPhone maker a slight dip in its market cap at $3.181 trillion.
On May 2, 2024, Apple reported its financial results for the second quarter of fiscal 2024, ending March 30, 2024, with quarterly revenue of $90.8 billion, a 4% decrease year over year, and earnings per diluted share of $1.53.
The company generates revenue from a diverse portfolio that includes sales of iPhones, iPads, and Macs, as well as services like the App Store, Apple Music, and iCloud. This diversified approach ensures a steady income stream. Apple's prowess in innovation, forward-thinking, and marketing remains unmatched.
Legendary investor Warren Buffett is famously a big believer in Apple for one reason - their innovation. Their continuous release of groundbreaking products helps them secure their position as the second most profitable and second most valuable company, previously holding the top spot until 2024. As long as innovation remains a priority, Apple's success is likely to continue.
3. NVIDIA ($3.113 trillion)
Nvidia, a leading computer chip manufacturer of the AI boom, has seen its stock soar, briefly surpassing Microsoft and Apple as the world's most valuable public company before retreating with a market cap of $3.113T, Nvidia's share price surged by 3.6%.
Nvidia's chips are essential for training AI algorithms used in technologies like ChatGPT. This surging demand has boosted Nvidia’s revenue to $26 billion in the first quarter, up from $7.2 billion a year ago. With a year-to-date stock increase of over 170% and an incredible rise since the end of 2022, Nvidia now dominates about 80% of the AI chip market for data centers. This monumental growth reflects strong investor confidence in AI's transformative potential.
Perhaps the most impressive thing about the chip making company is their rise to $3 trillion valuation. It took them 30 years from their founding to get to a $1 trillion valuation, then 10 months to reach $2 trillion, and only 3 months later crossed the $3 trillion threshold!
4. Alphabet ($2.218 trillion)
As of June 2024, Alphabet Inc. is positioned as the fourth largest company worldwide by market capitalization, boasting a market cap of $2.218 trillion.
In its latest financial report for the quarter ending March 31, 2024, Alphabet reported a revenue of $80.5 billion, reflecting a 15% increase year-on-year, and a net income of $23.7 billion.
Alphabet serves as the parent company to Google and other businesses. Google, well-known for its services like Search, Ads, Maps, and YouTube, remains its primary entity. Alphabet's portfolio also includes ad services, digital product sales, cloud services, and hardware like Nest and Waymo.
At the close of 2023, the company reported net revenues of $78.78 billion and managed to reduce expenses on technology equipment. The company is strategically focused on AI, emerging technologies, and diversifying revenue streams beyond advertising for sustained growth.
5. Amazon ($1.967 trillion)
Millions of merchants and consumers depend on Amazon's marketplace, making it the 5th most profitable company in the world with a market cap of $1.967 trillion.
Here’s a breakdown of Amazon's recent performance based on Q1 Earning Report 2024:
Earnings per Share: 98 cents vs. 83 cents expected (LSEG)
Revenue: $143.3 billion vs. $142.5 billion expected (LSEG)
Net income more than tripled to $10.4 billion, or 98 cents per share, from $3.17 billion, or 31 cents per share, last year. Sales grew 13% from $127.4 billion a year earlier.
Amazon forecasts continued profitability growth in the second quarter but at a slower rate, with operating income expected to be between $10 billion and $14 billion, up from $7.7 billion a year earlier.
Overall, Amazon's earnings growth has benefited from significant cost-cutting, optimization of fulfillment operations, and stabilized cloud spending. CEO Andy Jassy has tightened the company’s expenditures while expanding profitable services such as advertising, cloud computing, Prime memberships, and its third-party marketplace.
6. Saudi Aramco ($1.788 trillion)
As of June 21, Saudi Aramco's valuation surpassed the $1 trillion mark, placing it among tech giants like Apple, Microsoft, Nvidia, Alphabet, Amazon.com, and Meta Platforms.
Earlier in February, Saudi Aramco briefly held the title of the world's most profitable company as its shares surged, reaching a market cap of SR9.24 trillion ($2.463 trillion). On May 7, 2024, Aramco reported a net income of $27.3 billion for the first quarter of 2024, down from $31.9 billion in Q1 2023.
In 2023, Saudi Aramco, the Saudi Arabian oil behemoth, achieved the highest global net revenue, earning profits exceeding $247 billion.
7. Meta ($1.255 trillion)
As of 2024, Meta Platforms Inc. is recognized among the world's top most valuable companies with a market cap of $1.255 trillion. According to Forbes, Meta ranks 7th in terms of market valuation, signifying its substantial market capitalization driven by its diverse suite of social media platforms like Facebook, Instagram, and WhatsApp, as well as advancements in virtual reality through Oculus and its metaverse ambitions.
Meta's shares dropped 16% in extended trading after issuing a modest forecast, which overshadowed their better-than-expected first-quarter results.
Meta projects second-quarter sales to be between $36.5 billion and $39 billion. The midpoint of this range, $37.75 billion, represents an 18% year-over-year growth but falls short of analysts’ average estimate of $38.3 billion. The stock sell-off intensified early in the earnings call after CEO Mark Zuckerberg discussed the company's investments in areas such as augmented reality glasses and mixed reality, which currently do not generate revenue. He also noted the increasing investments in artificial intelligence.
8. TSMC ($902.23 billion)
Taiwan Semiconductor Manufacturing Company (TSMC) made it to the list of the world's most valuable companies. This is largely due to a surge in market capitalization of $902.23 billion driven by high demand for AI chips.
After a significant rally, TSMC surpassed Broadcom Inc. in value. Analysts from Morgan Stanley and JPMorgan Chase & Co. predict further growth due to increasing AI-related revenue and strong pricing power. TSMC's recent gains offset weaker iPhone sales, with some brokerages raising their price targets by about 10 percent.
Many Wall Street brokerages have upgraded their price targets for TSMC, highlighting growing AI demand and potential price hikes by 2025. Goldman Sachs raised its target by 19%, expecting chip manufacturing prices to climb, while JPMorgan anticipates AI contributing to 35% of total sales by 2028. As a leader in advanced chip technology, TSMC has benefited significantly from its relationship with Nvidia Corp., making it a top choice for global investors.