Multi-trillion Dollar Companies

Back in May 2018, was when Apple become the first trillion-dollar publicly traded company and then August 2020 it became the first $2 trillion company and now Apple is worth over $2.5 trillion. [$2.55 trillion].

Microsoft is at $2.26 trillion.

Google is at $1.93 trillion.

Amazon is $1.76 trillion.

Facebook is at $1.08 trillion.

There are four companies over half a trillion. Tesla, Taiwan Semiconductor, Berkshire Hathaway and Nvidia.

US GDP in 2018 was $20.6 trillion and now it is $22.7 trillion. The US GDP increased 10% and the value of the tech giants increase by about 200%. The CBO (Congressional Budget Office) projects US GDP will be $32 trillion in 2030.

According to the latest long-term forecast, Apple price will hit $200 by the middle of 2022 and then $250 by the middle of 2023. Apple will rise to $300 within the year of 2024, $400 in 2026, $500 in 2027, $600 in 2030 and $700 in 2033.

Apple is projected to double its valuation by 2024 and double again by 2030. Apple could be a $10 trillion company in 2030. The Big four tech companies are currently valued at over $8 trillion. Doubling by 2024 and again by 2030 and the Big Four tech companies will be worth $32 trillion.

Apple is worth about fifteen times the peak valuation of Nokia. This was because Apple transformed the cellular phone business from a product business to a service business. Apple created a software platform that could dominate music, games, finance and other industries.

The technology companies overtake an older competitor in one industry but transform the business into ultra-high margin and one where they can dominate other industries. Margins going from 4% to 40% increase the value of the company by ten times. This is transforming the whole economy.

GDP is the sum of spending (or income) in a single year. Corporate valuation can be deemed to be the net present value of multiple years of earnings. Corporate value would be less than GDP if the net income is about 5% of revenue or less. 20 years of forward earnings would be less than 100% of the single year. However, higher net income could enable many years of forward earnings to exceed the spending in a single year.

Apple doubling by 2024 would require things to go right:

* An outstanding 5G super cycle that supports iPhone sales increase comparable to early 2010s levels, when the product category was still in the middle of its growth life cycle;
* A sizable, game-changing product launch that adds revenues where none currently exist. The most likely candidates would be augmented or virtual reality wearable devices, or the Apple Car.
* Aggressive monetization of Apple’s user base, primarily through service offerings and cross-selling of wearable and complementary products. In the case of services, segment revenues would somehow need to double in three years or less, rather than the expected five.
* Acceleration in the share repurchase efforts. Apple has been retiring its stock at a pace of 5% to 6% per year. Doubling this rate would be enough to boost EPS to where it needs to be.

15 thoughts on “Multi-trillion Dollar Companies”

  1. meh.
    When was the world ever about quality, rationality, or merit-based-fairness? Self-interest, glaring distraction, public manipulation, and 'flavor of the day' products and experiences have sold and inflated companies' wealth for decades — of course, they collapse just as fast along with much of their fan-base. Live fast or don't.

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  2. Absolutely meaningless.
    Stock valuations as a method of determining 'theoretical' company value by trying to consider possible enterprise value, likely cash flow, earnings growth, etc. Nonsense for the last 10 to 15 years or more. That's like saying poker is ALL ABOUT your ability to assess risk and the likelihood of your hand's power versus all others at the table. Most of these companies are obscenely 'popular' (as opposed to quality); subject to a bizzarro world of regulation and taxation protection/ freedom, up until recently, not allowed in other industries; and able to be part of a distracting and non-commercial raucus political environment.
    Saying these companies are great is like saying that Ariana Grand and Taylor Swift are the best singers because of their personal 'valuation'. Nonsense.

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  3. We did have giant companies controlling countries in the past. The British and Dutch East India companies for a start. The Virginia company.

    But in each case, national governments end up flexing their muscles and taking control.

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  4. A smart cam that turns on the camera and audio recording when it looks like anyone is about to do something dangerous would be cool too.

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  5. Money always translate to power, one way or the other. When a major company with enough money will see will have a major country standing in its way the company may find a way to curb the public government, it already is happening, but in future it will be way more pronounced.

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  6. Yeah, that is a very 70s and 80s fear, visible in cyberpunk, thinking that some time in the near future, companies would take over governments and produce private countries.

    Not really. Companies aren't really interested in such a thing as keeping a whole population safe and fed, leaving the management of the unprofitable but necessary things to taxation and the state machinery in exchange of obedience.

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  7. So when will giant companies will reach a tipping point where governments will loose their relevance? Will countries be controlled by big companies? The prospects are not good.

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  8. Well, while China makes STEM graduates by the millions and exports them to later return them home with the knowledge, Westerner Gen-Z's are more willing than ever to get into useless climate-studies mumbo jumbo, ensuring a -not that- long and -not that- prosperous career at McDo or Starbucks, or joining the hordes of jobless and indebted, scammed by the universities selling worthless careers as hot topics with a lot of future.

    https://www.theguardian.com/environment/2021/sep/06/gen-z-climate-change-careers-jobs

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  9. Indeed. Making the assistant more intelligent, relatable, even conversational with some simulation of memory and moods would gain them a lot of customers.

    Humans are contact hungry, and assistants that can be used for conversation would have a huge potential customer base.

    And not be completely useless. A smarter AI that actually understands who is the user better (e.g. an elderly or disabled person), can recognize some of the things it 'sees' and the user habits, watching over them and warns someone if something odd happens (like them not taking their pills or lying flat on the ground unresponsive), would be very socially useful.

    That is still above the capabilities of our AIs, but they're already slowly catching up.

    Yeah, that would be a huge security and privacy risk too, but for the people really needing them and having their lives improved, it would be a lesser concern, I think.

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  10. Turning Siri into a much better emulation of a self-aware AI, capable of accepting and understanding even relatively vague instructions, would pretty much clench it.

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  11. Me thinks it will be hard to see a repetition of the conditions taking Apple where it is.

    Once everybody has a smartphone, and a software market sufficiently dense, the gains return to the single digits.

    Big gains came from the novelty, when going from nothing to a full set of new technologies and services in a short time span, something making people ditch their old devices and buy a shiny new Apple one, and paying for the additional services coming with it.

    Now Google and the Android ecosystem have occupied the other parts of the market, not letting go any chance to gain a small market margin.

    To entice customers, they will need to be more compelling, providing new services that improve people's lives and make them willing to pay more. What kind of services are those?

    That's the question. I'm sure Apple and Google would like to know the answer.

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