During the pandemic some of the largest companies in the world got bigger and some got smaller. Global Finance compares two of the best-known rankings of company size with its own list of the world's Top 10 by market capitalization to provide a comprehensive picture of global corporate goliaths.

Author: Luca Ventura

Is it Apple, Amazon or Microsoft? Or did Alphabet or Facebook manage to pull it off? These giants have been in a tight race for the title of the most valuable publicly-traded company for quite some time. As of November 3, 2020, the day of the U.S. presidential election, the winner was Apple. Not only has the Cupertino powerhouse dominated the list for the better part of 2020, but in August it became the first American company to reach a market valuation of $2 trillion. That was almost exactly two years after it was the first to pass the $1 trillion mark.

Yet, the stock valuation of a company can change quickly. Apple itself has experienced several setbacks. Microsoft briefly dethroned it as the most valuable enterprise in the world in 2018, Amazon beat both companies for the top slot in January 2019 but Microsoft took it back a month later. Then Apple regained the lead in October 2019, only to lose it to Microsoft in February of 2002. Microsoft's dominance didn’t last long. After releasing stellar earnings, Apple surged to the top of the ranking in June where it stayed for the rest of the year.

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 the company's phenomenal success. While sought-after products like its iPhones, computers and tablets propelled Apple to new heights, whenever sales appeared to slow so did the company’s market capitalization. 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.

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 such as pandemics and politics. For example, a tweet by US President Donald Trump announcing that there would be no second stimulus shortly before the November election sent markets spiraling downard. However, by the end of 2020, so-called stay-at-home stocks that gained in value amid shutdowns and remote working dropped in value with announcements by pharmaceutical companies that COVID-19 vaccines would become available soon.

While market capitalization indicates the cost of owning a piece of a company today, it is worth asking if it reflects the company's objective value or inherent worth. Warren Buffett once famously said, “Nothing is further from the truth.” Still, as the founder of Berkshire Hathaway, one of the most-valuable businesses in the world, Buffett knows that behind such numbers always lies some truth. 

In time, as certain companies rise to prominence, others will decline, and some may even go into bankruptcy. In that sense, Apple and Microsoft (as well as Berkshire Hathaway and Amazon too)—all of which have survived dotcom bubbles and financial crisis to come back stronger than ever—are rather remarkable cases of staying power. 

While most of the top 10 highest-valued companies are American, a few exceptions prove the point: Chinese technology firms Tencent and Alibaba which, along with Taiwan Semiconductor, vaulted into the top 10 only in recent years. Their rise marked a shift not just in the geographical composition of the list, but a sectoral one as well: Until a decade ago, the most capitalized enterprises on the stock market were traditional long-standing "blue-chip" behemoths like Exxon, General Electric and AT&T. Today it is almost all tech companies.

Focusing too closely on ever-changing share prices and investor sentiment rather than on underlying fundamentals can be misleading. 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 a year ago. Only their growth prospects have changed in relation to the current circumstances. But those too, as we know, can evolve relatively quickly.

Other rankings, thus, use metrics other than market capitalization to determine which company is truly the largest. Published every year since 1995, Fortune's annual Global 500 list ranks the world’s top corporations by revenue. While the 2020 ranking does not reflect the pandemic’s impact, it still provides a bird's-eye view of the most important long-term trends in global markets.

The 500 top firms in 2019 beat performance records with combined revenues of $33.3 trillion (up 2% from 2018), with Walmart claiming the title of the largest company by revenue for the seventh consecutive year. However, this is perhaps the most important takeaway: China had the most companies on the list, up five from 2018 to124 (adding Taiwan, the magazine says, the total for Greater China is 133). The US held steady with 121, while Japan added one name to the list for a total of 53. Overall, the companies included in the survey encompass 225 cities and 32 countries.

Where does Apple, the most capitalized company in the world, stand in Fortune's ranking? Scroll down to spot number 12. Only one of the big five tech companies, Amazon at spot number 9, makes the top 10: Alphabet is at number 29, Microsoft at 47 and Facebook is trailing at 144, squeezed between Chinese pharmaceutical company Sinopharma and German chemical firm Basf.

When ranking companies by revenue, technology stocks do not fare as well as when they are ranked by their market value. Behind Walmart in Fortune’s top 10 we find Chinese energy corporations Sinopec, State Grid and China National Petroleum (respectively in second, third and fourth place) along with Royal Dutch Shell (5), Saudi Aramco (6), Volkswagen (7), British Petroleum (8) and Toyota (10).

Why do stock investors prefer to pour money into tech companies and startups then if they generate less revenue than car, energy, chemical, or pharmaceutical giants? Because tech companies have much greater potential for growth. A person who bought $100 in Amazon shares during the company's 1997 IPO, as of November 16, 2020, would own stocks worth about $160,000.

That also explains the success and interest often surrounding companies with tiny, non-existent or even negative profits. Their shareholders hope that these companies will be “the next Amazon,” a company that recorded its first annual profit in 2003, six years after its IPO. Jeff Bezos has long maintained that investing in future profitability through new products and services takes priority over hitting earnings estimates, a strategy that paid off handsomely.

In other words, there is no simple way to fully ascertain the size, influence and outlook of a company in relation to another company at any given moment.

That is not to say doing so is not worth trying. To that end, the Forbes Global 2000 list—this year at its 18th annual edition—uses a multi-dimensional approach. It ranks the world's largest companies by using a composite score achieved by weighing revenues, profits, assets and market value equally.

COVID-19, it comes as no surprise, has affected every company on the list. By May, the report says, cumulative market values for the world’s 2,000 largest public businesses were already down more than 4% since last spring and profits by 2.9%.  The survey also turned out results similar to the Fortune 500 list when it comes to Chinese companies: they are rising. For the second consecutive year, China makes the most appearances out of any country in the top 10, beating the US’s four entries with five. Overall, China together with Hong Kong is home to 324 companies, up from 309 in 2019, while the US still prevails in terms of the number of enterprises listed, boasting 588 firms. Japan (217), the United Kingdom (77), Canada (61), South Korea (58), France (57), Germany (51), India (50) and Taiwan (43) make up the rest of the top 10 countries with the most entrants in the ranking.

In conclusion, while it is fairly easy—based on economic, technical and organizational criteria—to tell a large company from a small company, things get more complicated when trying to choose among global behemoths which ones are the largest companies. Is it Microsoft with its giant market capitalization, Walmart with over 11,000 stores in 27 countries, ICBC with its 150 million customers and assets of over $4,300 billion, or Facebook with 2.7 billion users? Like beauty, size is in the eye of the beholder.

Top 10 Largest Companies by Market Capitalization*

Rank Company Country Sector ($ Bil.)
1 Apple U.S. Technology 1,971
2 Saudi Aramco Saudi Arabia Energy 1,956
3 Amazon U.S. Consumer Services 1,592
4 Microsoft U.S. Technology 1,546
5 Alphabet U.S. Technology 1,116
6 Alibaba China Consumer Services 863
7 Facebook U.S. Technology 795
8 Tencent China Technology 724
9 Berkshire Hathaway U.S. Financial 496
10 Taiwan Semiconductor Taiwan Semiconductors 405
*As of November 3, 2020.

Top 10 of the Fortune Global 500*

Rank Company Country     Revenues ($ Mil.) Revenues (% Change)           Profits ($ Mil.) Profits (% Change)
1 Walmart U.S. 523,960 1.9 14,880 123.1
2 Sinopec Group China 407,010 -1.8 6,793 16.2
3 State Grid China 383,910 -0.8 7,970 -2.5
4 China National Petroleum China 379,130 -3.5 4,443 95.7
5 Royal Dutch Shell Netherlands 352,110 -11.2 15,840 -32.2
6 Saudi Aramco Saudi Arabia 329,780 -7.3 88,211 -20.5
7 Volkswagen Germany 282,760 1.6 15,540 8.5
8 BP United Kingdom 282,620 -7.0 4,030 -57.1
9 Amazon U.S. 280,520 20.5 11,590 15.0
10 Toyota Motor Japan 275,290 1.0 19,096 12.4
*Fiscal year ended on or before March 31, 2020.

Top 10 of the Forbes Global 2000*

Rank Company Country     Revenues ($ Bil.)          Profits ($ Bil.)          Assets ($ Bil.)     Market Value ($ Bil.)
1 ICBC China 177 45 4,323 242
2 China Construction Bank China 162 39 3,822 203
3 JPMorgan Chase U.S. 143 30 3,139 292
4 Berkshire Hathaway U.S. 255 81 818 455
5 Agricultural Bank of China China 149 31 3,698 147
6 Saudi Aramco Saudi Arabia 330 88 398 1,685
7 Ping An Insurance Group China 155 19 1,219 187
8 Bank of America U.S. 112 24 2,620 209
9 Apple U.S. 268 57 320 1,286
10 Bank of China China 135 27 3,387 113
*Data as of early April 30, 2020.