Who'll become the first trillion dollar company?

Apple is the favourite to be the first ever business valued at $1 trillion. But who else could beat them to it?

by Arun Kakar
Last Updated: 05 Jan 2018

On Tuesday, Apple’s valuation peaked at $869bn, prompting many investors and commentators to herald 2018 as the year the world would see the first trillion dollar company. The smart money may be on Apple to cross the line first, but others are hot on its heels. With the world’s top five (mainly tech) companies having a total value of $3.35tn, and growth rates among them reaching ridiculous numbers as high as 61%, the race is well and truly on. Here are the main contenders.


Market Cap: $869bn

Revenue: $229bn

Why it might

The obvious answer is that it’s already by far the closest to the $1tn mark, but Apple is also predicted to have its biggest year yet, with sales confounding executives’ worries about the iPhone X’s hefty price tag scaring off customers.

In the fiscal year to September 2018, Apple is expecting to sell 245 million iPhones alone. It’s also set to benefit from Trump’s tax reforms, and from the continued expansion of the Chinese and Indian middle classes. ‘You have to go back to Rockefeller and Standard Oil to find a company so dominant in a business so large,’ said David Rolfe, chief investment officer at Wedgewood Partners.

Why it might not

Apple always looks rosy in the immediate aftermath of a new iPhone release, so beware the hype over the iPhone X. The company’s share price has also grown far faster than its fundamentals over the past few years, a pattern that is unlikely to continue forever – especially as most of its markets have already reached ‘peak smartphone’ (i.e. most people who are going to have a smartphone already have one).  

There’s a recent trust issue too: last month's admission and apology about battery slowing down of iPhone units sent out ripples of bad press that it has never experienced before on such a scale. According to Patently Apple, it’s facing several lawsuits over the mishap, including one worth $999bil. Wow.

MT’s odds: 1/2


Market Cap: $563bn

Revenue: $136bn (2016)

Why it might

The Bezos beast just can’t stop growing. Share value soared by 58% last year, leading to that one time where Bezos saw himself become $10.3bn richer in a single day. Amazon is continuing to expand with ruthless intent. The 18 month target it set this time last year to increase its workforce by 50% to over 280,000 is already close to being met, and it’s been growing its advertising arm behind the scenes too.

That’s not to mention the money it’s pumping into its Prime streaming service, the home assistant market (which its Echo speaker leads) and its foray into groceries with Whole Foods. One influential tipster even predicted it's going to by US supermarket giant Target this year.

Why it might not

Apple may be growing revenues much faster than Apple, but unlike the iPhone maker it doesn’t make a huge profit, doesn’t pay a dividend and doesn’t have $200bn sitting in foreign bank accounts, waiting to be repatriated. It also faces stiffening competition from other electronics and luxury retailers, with Wal-mart posing a particular threat in online retail. All this has created a risk of the firm underperforming in 2018, according to advisory firm Bernstein.

MT’s odds: 4/1


Market Cap: $729bn

Revenue: $89bn (2016)

Why it might

Google’s parent company shows no sign of slowing down, as it gradually swallows the global advertising market. Q3 sales were up 24% in 2016, driven of course by ad revenue, but Alphabet also has fingers in many other pies.  

Sales of the Pixel phone and tablet devices jumped by up to 40% over the Christmas period, and Google’s cloud and Play platforms proved strong contributors to overall performance. There’s also the looming possibility of YouTube entering the conventional music streaming market after signing deals with the major record labels and leading a $120m investment in Chushou, a Chinese game-streamer that will increase its overseas viewing tallies.

Why it might not

If there is reason to be (ever so slightly) pessimistic about Alphabet, it is that a lot of its competitors are chasing it on its home turf. Google’s dominance in advertising (along with Facebook) may be secure so long as it retains its dominance over search, but it holds no such advantage in the voice assistant and AI arms races. 

Both Microsoft and Apple, with Cortana and Siri respectively, are pumping huge sums of money into their machine learning and AI programs, and the pressure will be on Alphabet to integrate its peerless research projects into profitable products.

AI also isn’t the only expensive project the firm likes to play with. Its habit of investing in literally everything also has a few analysts anxious about the effect on its bottom line. This week’s news that it's exploring the option of selling restaurant review app Zagat which it bought for $151m back in 2011, might add a little more weight to those worries.

MT’s odds: 2/1


Market Cap: $514bn

Revenue: $27bn (2016)

Why it might

A 47% surge in Q3 revenues helped shrug off the doubters last year, as Facebook continues to defy expectations. There’s no reason to think that it's going to stop doing so either. Facebook is the largest social network in the world and no one even comes close: user numbers are at 1.5 billion daily and 2.4 billion monthly, and that’s before Instagram comes into consideration. It still lags behind Google in the internet ad duopoly, but several ad buyers expect it to chip away it this dominance: Cowen analysts surveyed 50 senior ad buyers and found that 41% saw Facebook as the best place to launch a video ad campaign.

Keep an eye out also for Facebook Watch. The video streaming arm has been quiet since its launch last summer, but 2018 could be the year it starts to make big moves. It’s been envisioned as a Netflix/YouTube hybrid, looking to produce professional longer-form content as well as YouTube-style streamables: A potentially mammoth market space that neither of the other two have quite managed to fill (yet).

Why it might not

There have been serious questions raised over the company's alleged role in fake news, US election interference, and ‘misuse of our tools’. Zuckerberg’s famous, self-imposed annual challenge this year (previous examples include eating only meat he had killed himself) was to, well, do what he probably should be doing as a CEO anyways and ‘fix’ the issues that plagued Facebook throughout last year.

Perhaps more significantly, there’s also a fair chance that the company’s video and VR bets could come up short. Snap, meanwhile, threatens to erode its hold over the younger generation’s attention.

MT’s odds: 5/1 


Market Cap: $659bn

Revenue: $89bn

Why it might

CEO Satya Nadella made clear when he took the job form Steve Ballmer in 2014 that Microsoft was in need of change. He’s accepted that the company could no longer fall back on its operating system monopoly, and took to offering software in a range of new, higher-growth areas.

Microsoft Office is pushing into education and frontline workers with its new bundled 365 packages, giving it projected yearly revenues of as much as $26bn by 2021. Azure cloud -second only to Amazon in the consumer market - is continuing to grow, reaching its 2018 $20bn annualized revenue target last October. One of the most lucrative areas of growth has been in the ‘productivity and business process’ area. This encompasses LinkedIn, with its talent solutions recruitment tool proving a success with employers, as well as using the site to look towards businesses selling products.

Why it might not

One part of Microsoft grows as another shrinks. So while Nadella is proving there’s a place for the company with the new kids on the tech block and make blue chip profits, he’s not been able to achieve anything like the same growth as them. Revenues since 2014 have been largely flat (compare with Amazon, which has been growing at faster than 25% a year).

MT’s odds: 6/1


Market Cap: $534bn

Revenue: $21bn (2016)

Why it might

The most valuable tech company in the world’s largest market, Tencent’s shares grew 117% in 2017. Growth has been rapid – Q3 revenues were up a striking 60%, and they’re safely diversified.

Its WeChat messenger app – the most popular in China, with 1 billion users – just got a license to sell mutual funds, capitalising on its expanding financial services offering that’s leaving traditional finance houses in China shuddering.

Tencent also partnered with Spotify in a minority stakes swap last year, purchased roughly 10% of Snap, 5% of Tesla and is looking to get into the driverless car business. All this international expansion has also coincided with China opening up its capital markets as well, sure to racket up the attention of investors already swayed by Tencent’s performance. 

Why it might not

There is always that nagging feeling that Chinese stocks might just be a teensy bit overvalued, as shares rapidly outpace the earning upgrades given to them by analysts. The idea of a company that does $20bn or $30bn of business a year being worth $1tn seems somehow... wrong.

Also, while it is almost certain that Tencent will become an ever more major player in the global internet, its international expansion is still in its infancy. Tencent will need to tread with extreme care if it is going all in with an acquisition and investment strategy as it looks to be pursuing.

MT’s odds: 7/1

Saudi Aramco

Market Cap: $42trn, according to Crown prince Mohammed Bin Salman

Revenue: $510bn

Why it might

Revenue’s were over $500bn for Saudi Arabia’s national oil giant, and it is moving closer to a record IPO. On New Year’s Day, it changed its status to a joint-stock company ahead of its rumoured float, which would see the sale of up to 5% of its shares. If this happens, then it’s likely to be the biggest IPO in history, with the Saudis saying it would raise up to $100bn, instantly crossing the $2tn valuation mark ($1tn? Pah!).

Why it might not

Well, it could just decide against a float. Nothing has been confirmed yet. Also, it’s not clear whether the market will end up valuing it quite so high, unless oil prices continue their recent rise.

MT’s odds: 12/1


Image Credit: Pixabay/Pexels

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