The $1 trillion stock club is an exclusive group of companies that have achieved a market capitalization of $1 trillion or more. As of October 2021, only six companies in the world belong to this club: Apple, Microsoft, Amazon, Alphabet, Nvidia, and Saudi Aramco. These companies are mostly in the technology sector, except for Saudi Aramco, which is the world’s largest oil producer.
But how did these companies reach this milestone, and what are their prospects for the future? And who are the potential candidates to join them in the near future? Let’s take a closer look at each of these questions.
How did they get there?
The $1 trillion stock club is a relatively recent phenomenon, as the first company to reach this valuation was Apple in 2018. Apple is widely regarded as one of the most innovative and influential companies in the world, with a loyal customer base and a dominant position in the smartphone, tablet, and wearable markets. Apple also has a strong ecosystem of services, such as iCloud, Apple Music, Apple TV+, and Apple Pay, that generate recurring revenue and high margins. Apple’s market cap as of October 2021 is $2.46 trillion1.
Microsoft followed Apple in 2019, becoming the second company to join the $1 trillion stock club. Microsoft is a software giant that has successfully transitioned to the cloud era, with its Azure platform being one of the leading providers of cloud computing services. Microsoft also has a diverse portfolio of products and services, such as Windows, Office, Xbox, LinkedIn, and Bing, that cater to various segments of consumers and businesses. Microsoft’s market cap as of October 2021 is $2.31 trillion1.
Amazon also joined the $1 trillion stock club in 2019, thanks to its e-commerce dominance and its AWS cloud computing division. Amazon is the undisputed leader in online retailing, with millions of products and services available on its platform. Amazon also has a competitive advantage in logistics and delivery, with its Prime membership offering fast and free shipping to its customers. AWS is the largest and most profitable cloud computing provider in the world, serving millions of customers across various industries and sectors. Amazon’s market cap as of October 2021 is $1.68 trillion1.
Alphabet, the parent company of Google, reached the $1 trillion mark in 2020, becoming the fourth company to join the club. Alphabet is best known for its Google search engine, which dominates the online advertising market. Alphabet also owns other popular platforms and services, such as YouTube, Gmail, Google Maps, Google Play, Chrome, Android, and Google Cloud. Alphabet also invests in emerging technologies and ventures through its subsidiaries Google X and Google Ventures. Alphabet’s market cap as of October 2021 is $1.84 trillion1.
Nvidia is the newest member of the $1 trillion stock club, having achieved this valuation in 2021. Nvidia is a leading manufacturer of graphics processing units (GPUs), which are essential for high-performance computing applications such as gaming, artificial intelligence (AI), cloud computing, autonomous driving, and cryptocurrency mining. Nvidia also develops software platforms and tools that enable developers and researchers to leverage its GPUs for various purposes. Nvidia’s market cap as of October 2021 is $1.01 trillion1.
Saudi Aramco is the only non-U.S. company in the $1 trillion stock club, and also the only non-technology company. Saudi Aramco is the state-owned oil company of Saudi Arabia, which is one of the largest oil producers and exporters in the world. Saudi Aramco went public in 2019 on the Saudi Stock Exchange (Tadawul), raising $25.6 billion in the world’s largest initial public offering (IPO). Saudi Aramco’s market cap as of October 2021 is $2 trillion2.
What are their prospects?
The companies in the $1 trillion stock club have shown remarkable growth and resilience over the years, despite facing various challenges and competition from rivals. They have also been able to adapt to changing consumer preferences and technological trends, while maintaining their core competencies and competitive advantages.
However, being in the $1 trillion stock club does not guarantee future success or stability. These companies are subject to various risks and uncertainties that could affect their performance and valuation. Some of these risks include:
- Regulatory scrutiny: The companies in the $1 trillion stock club have attracted the attention of regulators and lawmakers around the world, who are concerned about their market power, data privacy practices, antitrust issues
- Cybersecurity threats: The companies in the $1 trillion stock club rely heavily on data and technology for their operations and services, which makes them vulnerable to cyberattacks from hackers or state actors who could steal or compromise their data or systems.
- Innovation challenges: The companies in the $1 trillion stock club have to constantly innovate and improve their products and services, as well as explore new opportunities and markets, to stay ahead of the competition and meet customer expectations. However, innovation is not easy or cheap, and it could also entail failures and setbacks.
- Competition: The companies in the $1 trillion stock club face fierce competition from existing and emerging rivals, who could offer better or cheaper alternatives to their products and services, or disrupt their markets with new technologies or business models.
Who else might join them?
The $1 trillion stock club is not a closed group, and there are several other companies that have the potential to join them in the future. Some of these companies include:
- Facebook: Facebook is the world’s largest social media company, with over 3 billion monthly active users across its platforms, such as Facebook, Instagram, WhatsApp, Messenger, and Oculus. Facebook also owns a large share of the online advertising market, along with Google. Facebook’s market cap as of October 2021 is $937 billion3.
- Tesla: Tesla is the world’s most valuable car company, with a market cap of $1.01 trillion as of October 20214. Tesla is known for its electric vehicles (EVs), which are considered to be innovative and environmentally friendly. Tesla also has a presence in the energy sector, with its solar panels and batteries. Tesla also has ambitious plans to develop self-driving cars and launch a network of robo-taxis.
- Berkshire Hathaway: Berkshire Hathaway is the investment company of legendary investor Warren Buffett, who has been at the helm since 1965. Berkshire Hathaway owns a diversified portfolio of stocks and securities, as well as several private businesses, such as Geico, Dairy Queen, Duracell, and BNSF Railway. Berkshire Hathaway’s market cap as of October 2021 is $775 billion5.
- Visa: Visa is the world’s largest payment network, facilitating trillions of dollars of transactions every year across various channels and platforms. Visa also offers a range of products and services for consumers and businesses, such as debit cards, credit cards, prepaid cards, digital wallets, and payment solutions. Visa’s market cap as of October 2021 is $511 billion6.
Conclusion
The $1 trillion stock club is a rare and prestigious group of companies that have achieved remarkable growth and success over the years. However, being in this club does not guarantee future performance or stability, as these companies face various challenges and risks that could affect their valuation. Moreover, there are other companies that have the potential to join this club in the future, depending on their innovation and execution capabilities. Therefore, investors should always do their own research and analysis before investing in any company, regardless of its size or status.
