World’s Largest Companies 2023

Is Apple still ahead of the pack? Or did Microsoft or Google manage to pull it off? Did Tesla, perhaps, race in front of everyone? And what about Amazon and Facebook (pardon, Meta)? These giants have been in a tight race for the title of the most valuable publicly traded company for quite some time. As of September 2, 2022, not long after they had reported second-quarter earnings, the winner was still Apple.

Yet the stock value of a company can change quickly. Apple itself has experienced several setbacks. Microsoft dethroned it as the most valuable enterprise in the world a few times, most recently in October last year (and Amazon did beat both of them for the top slot in January 2019), but its dominance did not last long. On January 3 of 2022, Apple became the first company ever to surpass $3 trillion market value. That did not last long either, but Apple has remained ahead of its archrival since then.

But how can we make sense of all the ups and downs in the valuation of these two tech pioneers? For most of the past decade, Apple's stock price has been both the beneficiary and victim of its own success. While sought-after products like iPhones, iMacs and tablets propelled Apple to new heights, whenever sales appeared to slow the company’s market capitalization suffered. By contrast, Microsoft's business model has always been centered around steadily growing streams of recurring revenues. You might not need a new smartphone or laptop every year, but if you purchase a software license, a cloud package or a videogame subscription, you will likely buy one again in the future.

Eventually, Apple started borrowing from Microsoft's playbook: it launched news and games subscriptions, a video streaming service, and even its own credit card. Once Apple moved beyond hardware to software and services, its revenue growth became unstoppable.

To be clear: companies of all shapes and sizes can play the steady and predictable stream of revenue game. Amazon, Google (pardon, Alphabet) and even Tesla (which has monthly fees for its autopilot and self-driving features, as well as for its premium connectivity package) are certainly among them. Today they are all $1 trillion-plus companies, and along with Apple and Microsoft, these top 5 US firms make up for roughly 20% of the S&P 500 index's entire market value.

Successful strategy (and product, and timing, and management) aside, the total dollar value of a company’s outstanding shares can be affected by a myriad of other unpredictable factors. It was not too long ago when a controversial tweet by former US President Donald Trump could send shares spiraling downward or soaring to new highs without much rationale to support the move. Tesla's Elon Musk seems at times to hold similar sway over investors. More reliably, every word uttered by the Federal Reserve Chairman, Jerome Powell, can impact company and sector stock prices. And then there are unforeseeable events like the Covid-19 pandemic: the so-called stay-at-home stocks that gained in value amid shutdowns and remote working dropped when vaccines became available; the opposite happened to those companies that could benefit from the reopening of the global economy.

The problem is that there seems to be an endless reserve of—well, precisely—problems. The stock market's biggest bogeyman is high inflation and the fear that central banks will continue raising interest rates to bring it down. And then there is the war in Ukraine, which—along with causing an unprecedented humanitarian crisis—triggered a massive sell-off in the global markets and sent oil prices skyrocketing. And for all the talk about the rivalry between the US tech giants, today the second-largest company by market capitalization behind Apple is not Microsoft but Saudi Aramco. Last May, the oil giant even briefly overtook Apple as the most valuable business in the world.

When it comes to oil and natural gas, price volatility cuts both ways: prices can deflate as fast as they rise. While fossil fuels are not exactly a thing of the past, the war in Ukraine has only accelerated the energy transition to a greener future. Among today’s highest-valued companies, Saudi Aramco is an outlier: until a decade ago, many of the most capitalized enterprises on the stock market were traditional long-standing blue-chip behemoths like Exxon and Chevron, General Electric, AT&T. Today the top 10 are almost all tech companies.

Focusing too closely on ever-changing share prices, investor sentiment and political events rather than on underlying fundamentals can be misleading. As the wizard of investment and chairman of Berkshire Hathaway, Warren Buffett, famously said, the stock market is a device for transferring money from the impatient to the patient. Fear often drives decisions when it comes to buying and selling stocks, but even in these tumultuous times many publicly traded companies are not dramatically different in terms of market share, cash flow or employee headcount than they were until a year or two ago. It stands to reason that their growth prospects might have changed in relation of such a historic series of unfavorable circumstances—but those too can shift rather quickly.