The largest companies in the world are getting bigger. 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
Project Coordinator: Pham Binh
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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 August 1, 2019, the winner was Microsoft. Just like in 1999.

The stock valuation of a company can change quickly. Microsoft briefly dethroned Apple as the most valuable enterprise in the world in 2018, Amazon beat both companies for the top slot in January 2019, and then Microsoft's valuation surged past rivals to cross the $1 trillion threshold for the first time in April 2019. How did that happen? While Apple—which is trying to move beyond hardware to services—suffered due to poor iPhone and MacBook sales, Microsoft's business model is centered around steadily growing streams of recurring revenues. You might not need a new smartphone or laptop every year, but if you purchased a software license, a cloud package or a videogame subscription, you are likely to buy it again in the future.

However, the total dollar value of a company’s outstanding shares, its market capitalization can be affected by a myriad of unpredictable factors. For example, stock markets have repeatedly lost value due to US President Donald Trump's tweets, including companies that have little or nothing to do with China.

Market capitalization indicates the cost of owning a piece of a company today. But does it reflect 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, the sixth most valuable business in the world by market capitalization, 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 (like Sears). In that sense, Microsoft—which survived dotcom bubbles and financial crisis to come back stronger than ever—is a rather unique case of staying power. 

While most of the top 10 highest-valued companies are American, two exceptions stand out: Chinese technology firms Tencent and Alibaba, which vaulted into the top 10 last year, replacing Exxon Mobil and Wells Fargo. 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 companies on the stock market were traditional long-standing "blue-chip" powerhouses 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. Apple is not appreciably 'smaller' today in terms of market share, cash flow, or employee headcount than it was in 2018 when it briefly reached a market capitalization of $1 trillion dollars. Only its growth prospects in the eyes of the investors have shrunk.

Other rankings, thus, turn to other metrics to determine "largest." Published every year since 1995, Fortune's annual Global 500 list ranks the world’s top corporations by revenue. The 500 top firms in 2018 beat performance records with combined revenues of $32.7 trillion (up from $30 trillion in 2017) and profits soaring to $2.2 trillion (up from $1.9 trillion). The latest edition offers two main takeaways: 1) that large companies are generally growing larger; and 2) that in China, large companies are growing in number too. And for the first time ever, companies from the Republic of China (Taiwan) and the People's Republic of China dominated the list. This year, out of 34 countries represented, a record 119 Chinese businesses—plus 10 from Taiwan—made the ranking, up from 120 in the year before and surpassing the US's 121 firms.

Where does Microsoft, the most capitalized company in the world, stand in Fortune's ranking? One would have to scroll down to spot number 60. None of the big five tech companies made the top 10: Apple is 11, Amazon is 13, Alphabet is at 37th place and Facebook is trailing at 184, squeezed between German utility company RWE and LG Electronics.

Who tops the list? The richest companies in the world by revenue are Walmart, Chinese petroleum and chemical corporation Sinopec and Royal Dutch Shell. Why, then, if they generate more sales, do stock investors prefer to pour money into tech companies and startups? Because—unlike established companies—tech upstarts have much greater potential for growth. A person who bought $100 in Amazon shares during the company's 1997 IPO would own stocks worth $106,000 as of August 16.

That also explains the success and interest surrounding companies with tiny, non-existent or even negative profit, such as Tesla, WeWork, or Uber. Their shareholders hope that these companies will be 'the next Amazon,' which 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. 

Given the ups and downs of doing business and the growing volatility of stock markets internationally, it becomes clear that there is no simple way to fully ascertain the size and influence of a company in relation to another company at any given moment.

The Forbes Global 2000 list—this year at its 17th 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.

Forbes’ massive survey of global businesses turns out results similar to the Fortune 500 list—China is rising. In another first, China makes the most appearances out of any country in Forbes' top 10, beating the US's four entries with five. Overall, China together with Hong Kong is home to 309 companies, up from 291 in 2018, while the US still prevails in terms of the number of enterprises listed, boasting 575 firms, up 16 from last year. Japan (223), the United Kingdom (81), South Korea (62), France and India (57), Canada (56) Germany (53) and Taiwan (47) make up the rest of the top 10 countries with the most entrants in the ranking.

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 we try to rank the largest companies of them all. 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 $4,000 billion, or Facebook with 2.5 billion users? It's in the eye of the beholder.

Top 10 Largest Companies by Market Capitalization*

Rank Company Country Sector ($ Bil.)
1 Microsoft U.S. Technology 1,058
2 Apple U.S. Technology 959
3 Amazon U.S. Consumer Services 959
4 Alphabet U.S. Technology 839
5 Facebook U.S. Technology 550
6 Berkshire Hathaway U.S. Financial 496
7 Tencent China Technology 436
8 Alibaba China Consumer Services 431
9 Visa U.S. Financial 389
10 JPMorgan Chase U.S. Financial 366
*As of August 1, 2019.

Top 10 of the Fortune Global 500*

Rank Company Country     Revenues ($ Mil.) Revenues % Change           Profits ($ Mil.) Profits % Change
1 Walmart U.S. 514,405 2.8 6,670 -32.4
2 Sinopec Group China 414,649 26.8 5,845 280.1
3 Royal Dutch Shell Netherlands 396,556 27.2 23,352 79.9
4 China National Petroleum China 392,976 20.5 2,271 N/A
5 State Grid China 387,056 10.9 8,175 -14.3
6 Saudi Aramco Saudi Arabia 355,905 35.3 110,975 46.9
7 BP United Kingdom 303,738 24.2 9,383 176.9
8 Exxon Mobil U.S. 290,212 18.8 20,840 5.7
9 Volkswagen Germany 278,342 7.0 14,323 9.3
10 Toyota Motor Japan 272,162 2.8 16,982 -24.6
*Fiscal year ended on or before March 31, 2019.

Top 10 of the Forbes Global 2000*

Rank Company Country     Revenues ($ Bil.)          Profits ($ Bil.)          Assets ($ Bil.)     Market Value ($ Bil.)
1 ICBC China 176 45 4035 305
2 JPMorgan Chase U.S. 133 33 2,737 369
3 China Construction Bank China 150 39 3,382 225
4 Agricultural Bank of China China 138 31 3,293 197
5 Bank of America U.S. 112 29 2,377 287
6 Apple U.S. 262 59 374 961
7 Ping An Insurance Group China 152 16 1,038 220
8 Bank of China China 127 28 3,098 143
9 Royal Dutch Shell Netherlands 383 23 399 265
10 Wells Fargo U.S. 102 23 1,888 215
*Data as of early April 2019.