Trillion-dollar companies: what are they and which is next?

Microsoft was founded in 1975 by Bill Gates and Paul Allen and quickly became a market leader in consumer electronics, computer software, and related services. It is perhaps best known for inventing the line of operating systems, Microsoft Windows, as well as the Microsoft Office suite, and Internet Explorer browser.

According to financial reports, Azure, its cloud computing business, is the largest source of revenue for the business, as well as the fastest growing. Since the arrival of CEO Satya Nadella in 2014, Microsoft’s share price has soared almost tenfold from $35 to $305 in 2021, and its valuation is up more than 230%.

As the first company to surpass the $1tn mark in August 2018, the iPhone maker had reported strong financial results the day before, resulting in a share price jump. It then experienced a few dips, dropping to $800bn by the end of the year, but was followed by a rally in 2019, pushing the stock to new highs.

With a market capitalisation of more than $2.4tn, Apple is catching up with the value of the UK economy, which measured out to approximately $2.67tn of GDP in 2020, according to the Office of National Statistics (ONS). It is the world’s largest tech company by revenue, selling more than 217 million iPhones per year, according to Statista.

The parent company of the world’s most popular search engine by visitors, Google, made it into the trillion-dollar club at the start of 2020. It went on to grow by almost $270bn throughout 2020. The company’s core business has always been Google, which includes search, advertising, YouTube and Android.

However, the development of the Alphabet holding company introduced exploration of artificial intelligence (AI), autonomous cars, package delivery drones and more revenue-generating areas. In particular, Alphabet now competes against Microsoft and Amazon with its cloud division, which doubled its revenue run rate from $1bn to $2bn per quarter between 2018 and 2019.

Despite being founded in 1994 as an online bookstore, Amazon is now an e-commerce leader and has since entered the cloud computing, streaming and artificial intelligence (AI) industries, allowing the company to reach record highs.

In particular, the Coronavirus pandemic helped to accelerate Amazon’s valuation and share price between 2020 and 2021. According to Forbes, the company gained more than $570bn in market cap and a 63% share price increase between the start of the pandemic and Autumn 2020. If this growth continues in the near future, Amazon could be on track to reach a $2tn valuation along with its other two peers.

Electric car giant Tesla became the sixth official US company to join the trillion-dollar club on 25 October 2021, overtaking Meta’s market cap. Although it is now ranked 5th on the S&P 500 in terms of market capitalisation, it is in 89th place when ranked by 2020 annual revenues, which is the lowest on this list, according to Bloomberg.

Tesla’s valuation was boosted in October by an order for 100,000 vehicles by car rental company Hertz, skyrocketing the EV’s share price by almost 13% to reach a milestone $1tn market cap. It comes at a time when the demand for electric cars is at an all-time high and Tesla’s product offering has become even more mainstream than gas-powered vehicles.

Facebook was the fifth company to join the trillion-dollar club in July 2021, dipping in and out briefly. It is the youngest company of the list, founded only in 2004 by Mark Zuckerberg. It shortly lost a portion of its valuation after peaking, although it is still included on this list as it may be able to recover its $1trn market cap in the last few months of 2021.

On its first ever day of trading on 11 December 2019, Saudi Aramco received a valuation of $1.88tn, making it the largest IPO in history. On the following day, it rose to above $2tn, making it the first ever company to achieve this feat.

The company is one of the most profitable in the world according to revenue and was the fourth company to official register a trillion-dollar valuation. However, it is listed on the Saudi Stock Exchange (Tadawul), which makes it almost impossible to access if you are a retail trader.

PetroChina was the world’s first trillion-dollar company back in November 2007, after it reached a valuation of $1.19tn following a successful IPO on the Shanghai Stock Exchange. However, following the global financial crisis and collapse of oil prices, the company’s value plummeted to below $260bn by the end of 2007.

According to Bloomberg, PetroChina’s downfall was the largest destruction of shareholder wealth in history. As of October 2021, it has a market capitalisation of around $160bn, which is approximately 1/7 of its original valuation.