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Source: istock

What Companies Are Worth Trillions? Apple Keeps Breaking the Mold

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A company’s value or market capitalization is calculated by multiplying the share price by the number of outstanding shares. To date, only six companies in the world have valuations of $1 trillion or more. Four of them are based in the U.S.

What company was the first to be worth $1 trillion?

PetroChina was the first company in the world to achieve a value of $1 trillion. On November 5, 2007, the company’s A shares ended the first day of trading after an IPO on the Shanghai Stock Exchange and yielded a market capitalization of $1 trillion. However, the company only maintained the level briefly.

Apple was the first U.S. company to achieve a valuation of $1 trillion. The company passed $1 trillion on August 2, 2018, and nearly a year later, on August 19, 2020, they became the first U.S. company to reach a $2 trillion market cap.

Which other companies achieved a valuation of $1 trillion?

After PetroChina and Apple, four other companies have surpassed the $1 trillion mark. 

  • Amazon passed $1 trillion on September 4, 2018. 
  • Microsoft exceeded the $1 trillion mark on June 7, 2019.
  • Saudi Aramco passed $1 trillion on December 11, 2019. 
  • Alphabet, Google’s parent company, achieved a $1 trillion value on January 16, 2020.

On December 11, 2019, Saudi Aramco’s IPO on the Tadawul Saudi Stock Exchange ended its first day of trading with a market cap of $1.88 trillion. Also, Saudi Aramco became the first publicly traded company to achieve a $2 trillion valuation on its second day of trading.

Although Saudi Aramco hit the $2 trillion mark in December 2019, its shares have fallen since then amid a drop in oil prices. The company’s current market valuation is around $1.82 trillion.

Early in 2020, Alphabet surged amid a rally in shares of large internet stocks. The company has lagged behind its peers due to investors’ concerns amid stricter regulatory scrutiny. Google has faced antitrust probes due to its dominance in advertising and rising costs. However, investors expect Alphabet to keep growing. Alphabet Class A shares have risen 33 percent in the past year, which beat the 27 percent rally in the S&P 500.

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Source: istock

Why big tech companies continue to surge:

Right now, big tech companies are at the forefront of the global economy. Despite the COVID-19 pandemic, technology stocks continue to see massive gains. Amid lockdowns and store closures, big tech companies continue to see strong online sales due to the work-from-home trend. 

Investors keep flocking to big tech stocks amid the COVID-19 pandemic. They hope that the companies’ size and power will shield them from the recession. Investors like companies that have steadily improving sales. 

What's the outlook for big tech companies after the pandemic?

The possibilities look endless for the top big tech companies. Big tech companies have a grip on how people communicate, shop, and entertain themselves. The top companies have made billions of dollars during the COVID-19 pandemic.

According to a TechCrunch report, “The market sentiment appears to argue that when the global economy is back to full power, the market position of tech companies within it will be one of greater strength than before. This argument is doubled among companies that offer digital services, such as Apple.” 

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Source: istock

Amazon’s sales have surged due to increased deliveries to Prime members and other consumers amid the COVID-19 pandemic. Microsoft has seen strong sales and profits from its Office 365 subscriptions. Amazon and Microsoft are also leaders in the lucrative cloud computing market with AWS and Azure, respectively.

Microsoft, Amazon, Alphabet, and Apple are worth more than $6 trillion combined. Along with Facebook, these companies are the top five big tech companies right now. For some perspective, they account for 23 percent of the S&P 500’s entire value.

Currently, Amazon and Microsoft have a market capitalization under $1.7 trillion. Both companies are expected to reach valuations of $2 trillion within the next year or two. 

Apple is the first company worth $2 trillion

On July 31, 2020, Apple passed Saudi Aramco and became the most valuable publicly traded company in the world. On August 19, 2020, the company became the first U.S. company to reach a value of $2 trillion. According to CNBC, based on Apple’s share count of more than 4.275 billion, the company’s value exceeded $2 trillion at 11:00 a.m. ET on Aug. 19 when price rose to $467.77.

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Source: istock

Although it took Apple 42 years to reach a value of $1 trillion, the company doubled its value in just two years to pass the $2 trillion mark. 

So far, Apple shares have risen 60 percent year-to-date. The shares have risen more than 120 percent in the past year despite the COVID-19 pandemic. 

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