World’s Largest Public Companies – Shift In Power

Going back to the early 2000s, there were no incidences of companies exceeding the $300B market cap range in the U.S. or abroad and sustaining such a significant valuation outside of brief bubble-like conditions.  It had been generally accepted wisdom that companies so large had a difficult time maintaining their valuation because their sheer size led to exposed competitive flanks, a reduced rate of innovation, and practical problems managing themselves.  The “too big to grow” problem seemed to melt away in the 2010s, as five technology companies have comfortably exceeded the $300B market cap level and seem to be managing themselves rather well.  Even two financial companies have managed to crack the $300B barrier.  All of these behemoths are domiciled in the U.S.

It’s also worth noting that the astonishing success of the technology supergiants has generally come at the expense of international and global competitors within the technology and electronics sphere.  For example, Apple Inc. generates most of the global profits from consumer electronics and cellphones^* – spheres that once belonged to Japanese and European titans such as Sony, Nintendo, Panasonic and Nokia in the 1980s and 1990s. The market cap losses are as staggering as the market cap gains.  It’s axiomatic, but with so little market capitalization remaining in Japanese and European electronics companies, it appears that there is little left for the American supergiants to purloin.  

Brian Barish examines the largest companies in the world from 2010 and today. There is a definite change.

A similar dynamic is unfolding in other spaces, where internet titans Alphabet (Google) and Facebook appear to be cannibalizing much of the advertising profit stream that used to flow to diversified media companies.  In retail, Amazon looks poised to demolish the traditional retail business model.  In these instances, many of the businesses donating market capitalization to the American technology giants reside in the U.S. already.  If these “running out of runway” circumstances coincide with economic improvements outside the U.S. and the current dollar bull market gives way to something else – the turn in international fortunes may be upon us.