The latest results from Apple, Alphabet/Google, Amazon, Facebook and Alibaba are in. Who will win the race to $1 trillion, who will win the race to $2 trillion?
Let's cut to it, here are the latest results from the four companies in the latest quarter, revealed this week:
|revenue, in $billion||growth in per cent||profits in $billion||growth in profits in per cent||market cap in $billion|
- This excludes a $9.9 billion one-off tax charge Alphabet incurred to take advantage of changes in US rates for profits.
Or see it as pictures, note as above, Alphabet figures on profits exclude the one-off.
If growth in shares followed the trajectory in growth in profits, and continued at the same rate then:
Apple would see its market cap pass $1 trillion in 2019, and $2 trillion in 2026.
Alphabet would see its market cap pass $1 trillion in 2019, and $2 trillion in 2022.
Amazon would see its market cap pass $1 trillion in 2019, and $2 trillion in 2020.
Facebook would see its market cap pass $1 trillion in 2020, and $2 trillion in 2021.
Alibaba would see its market cap pass $1 trillion in 2021, and $2 trillion in 2023.
It won't work like that, of course. For one thing, in most cases, growth in profits will surely slow, although the Apple growth rate may continue for a while. For another thing, market cap is as much a function of expected profits as actual profits, and there is an awful lot of hope built into some of the share valuations.
Race to a trillion and two trillion dollars
If profits carried on growing at the rate we have seen over the last year, and assuming a market cap of say 44 times quarterly profits, which is the ratio that currently applies to Apple, a market cap of $1 trillion and $2 trillion would be reached for each of the five techs, according to this timetable:
|One trillion dollars||Two trillion dollars|
Note also, Aramco, when it is floated, may reach both targets first.