Remember the 1984 movie The Terminator where machines ruled the world? Well, we’re now in the year 2017, and while things are nowhere as dystopian as they were in The Terminator – it’s clear that technology is indispensable in our lives.
Now of course I don’t mean that technology’s taking over the world in an apocalyptic fashion, à la The Terminator. Today however, it is clear that the largest companies by market capitalisation* (or market cap, for short) are no longer the oil companies or retail corporations, but the tech nerds of Silicon Valley.
Over the past 5 years, we have witnessed a soar in the market cap of tech companies.
While the top companies dominating the market cap in 2011 were primarily oil and finance companies like PetroChina, Shell and ICBC, 2017 has seen tech companies like Apple, Google, Microsoft, Facebook and Amazon rise to the top of the list. And I daresay that you do use the products or services offered by one of these companies on a daily basis!
Source: http://finviz.com/screener.ashx?v=111&f=geo_usa&o=-marketcap (2017- as of Sep 6); http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/ (2001-2016)
As of June 30, 2017, the market cap of the top five companies increased by ~26% to $2.9 trillion vs. a year ago, while the S&P 500 saw an increase of only ~15%. It’s incredible to see how tech companies have taken a greater share of the top 100 companies than a decade ago!
According to a report by PWC on the top 100 global companies (by market cap), the technology industry ($3,582bn) has taken over the financial industry ($3,532bn) to become the largest sector in terms of market cap. What’s surprising however, is that, the technology industry comprises of only 12 companies while the financial industry comprises of 21! Consumer goods ($2,517bn) came in third.
Enough with the numbers!
You get the point. But the exponential growth won’t stop there. With the current trend of tech company domination, we can definitely expect new heights to be reached in 2018.
With great heights comes a greater fall.
With the tech nerds climbing up the ladder, who do you think fell the the hardest in the past few years? Yup you guessed it…the oil & gas industry.
From 2009 to 2017, we saw the oil & gas industry fall to its knees with big names such as Petrochina losing $86bn in market cap, and BP sliding 45 places in the global market cap rankings. There are several reasons for these changes, such as the dip in oil prices, development of new forms of energy and also, in the case of BP, various company crises.
The fallers – The Global Top 100 companies with a decrease in market capitalisation…
Who to watch out for?
It doesn’t stop here! Fast-rising tech companies like Shenzhen-based Tencent, has increased in market capitalisation form $13bn in 2009 to $272bn in 2017.
It’s going to be interesting to follow these big names over the next few years. Further, with blockchain and AI on the move, we could see another surprising shift over the next few years.
One thing is for sure – the tech industry isn’t going anywhere and continues to evolve faster than the speed of light.
*What is Market Cap(italisation)?
Market capitalization is the total dollar market value of a company’s shares outstanding and is nothing but the company’s shares outstanding multiplied by the current market price of one share.