It wasn’t that long ago that one billion dollars was considered an astounding amount of money; an amount that no business could hope to earn. Remember, even Mike Meyer’s Dr. Evil considered holding the entire world for ransom to the tune of ONE MILLION dollars, most likely because one billion seemed too farfetched.
But times have changed and many companies are not only pulling in billion-dollar valuations, but billion dollar earnings on a quarterly basis. Thanks to inflation, globalization, and advancements in technology, billion-dollar companies are downright ubiquitous.
With so many companies boasting these earnings, it only makes sense that CEOs would be turning their attention to a new financial goal: hitting a $1 trillion valuation. So far in modern day history, no company has even come close to hitting this mark. But that is changing as a handful of mostly tech and energy companies inch their way toward that goal.
To figure out which companies are poised to hit this mark, we’ve got to focus on market capitalization. According to Investopedia, market capitalization is the summation in total dollar amount that all of a company’s outstanding shares add up to. This is simply a different way of seeing how large a company is instead of looking solely at revenue and profit data. And, by looking at market capitalization, we can determine which companies will hit the $1 trillion market cap mark first.
There are a surprising number of contenders in this race, but a few are more likely to get there first.
Who will be the first trillion dollar company?
To clarify, when a company is called a $500 billion dollar company or what we’re talking about, a trillion dollar company, it refers to the market capitalization of the company. This refers to the total value of the company’s outstanding shares of stock. This differs from the enterprise value because debt is left out of the equation in market cap.
So let’s have a look at the heavyweights:
You’ve got to hand it to Google – the search giant is not even drinking-age yet but has already made significant and lasting contributions to the world through their products and experimental projects. Before their first decade was even under their belt, they were already one of the world’s most valuable companies, thanks in large part to already being thought of as the go-to search engine for countless global Internet users.
Google is currently worth around $730 billion, give or take a few billion, and is on pace to hit the $1 trillion mark sooner rather than later. In order to do this, they will need to focus diversifying their offerings and staying three steps ahead of tech advances. No doubt they will remain search king for decades to come, but their real value will come from what else they can offer.
When you hear the name Warren Buffet, you instantly think gazillionaire. Well, he’s not exactly a gizaliilionaire, but getting pretty close it seems. It just makes sense that his company, Berkshire-Hathaway, would be on this list.
One thing that sets Buffet’s company apart from others on this list is the fact that it isn’t a tech or energy company. It doesn’t even really have a direct impact on consumers’ lives. And, if you were to ask people if they’ve ever heard of it, most would say no, and the few who had heard of it would not know what the company did. For the record, Berkshire-Hathaway acts as a holding company for numerous other businesses including airlines, insurance, and restaurants, and many others.
Berkshire-Hathaway’s recent market cap has been pegged at roughly $350 billion, which puts them about one-third of the way toward their mark. They’ve gotten this far by using a slow and steady approach toward growth, and there’s little evidence to suggest this approach won’t get them all the way. The only question is, who will get there first – slow and steady or the younger, flashier tech companies.
It doesn’t take a genius to understand that a company that controls a vast amount of the world’s energy supply is going to be highly-valued. Exxon Mobil and Google are just about neck-and-neck, with Exxon having a market cap in the $350-$400 billion range.
While Exxon is definitely on track to one day hit the $1 trillion mark, its financial future, unlike the other companies on this list, is largely in the hands of consumers and governments that control market ebbs and flows and regulations.
For now, we can assume that, for the unforeseeable future, Exxon will continue to make mounds of money. However, unless they diversify or redirect in some way, the company could start to see their revenues decline. The real question is, will they have hit the trillion-dollar mark by then?
Microsoft is currently the second most valuable company in the world with a market cap of just over$650 billion. How did they get here? By having their hands in a lot of pots (industries) like video games, search engines, communications and more (talk about diversified!)
But Microsoft’s bread and butter has always been software licensing, and it’s their software products that will most likely push them over the $1 trillion mark someday.
Of all the companies on this list, Apple will potentially be the very first to hit the trillion-dollar mark. With a market cap of more than $900 billion, it’s worth double that of Exxon or Google, and there’s really no reason to think its growth will slow down.
In 2011 the company crossed the $300 billion mark, topped $700B a little over 4 years later, and as of today Apple has closed at over $900 billion. With the way that things are currently looking, Apple is the most likely to take the crown as the first trillion dollar company. With the introduction of the iPhone X Apple has positioned it’s already premium products in an ultra-premium position. If large numbers of people decide that the iPhone X is the new standard, Apple will see an explosion in income. Unless there is some major disruption in the industry, the maker of Macbooks, iPhones, iPads and wearables will most likely be the winner in this race.