The stock market’s 10 largest companies

The stock market’s largest companies inspire endless fascination, in part due to their utter immensity and the sheer scope of their operations. They provide some of the world’s most popular and essential products, and because of that they have some of its deepest pockets.

Here are the 10 largest companies listed on an American stock exchange by market capitalization and what that means.

The 10 largest companies by market cap

This list includes the biggest companies by their market capitalization or market cap, that is, the total value of all their outstanding shares of stock, rather than other measures such as sales. Market cap shows the total value investors give to the company, as they factor in not only the company’s current profitability but also its expected future profitability.

As you can see in the table above, the value of the largest companies stretches into the trillions of dollars, with the top company worth more than five times the 10th company. It includes many of the popular FAANG stocks, an acronym that’s a bit outdated given company name changes. These stocks are sometimes also called mega-caps, even more enormous than just large-caps.

This table also includes almost all the Magnificent 7 stocks, equities that have led the market due to their association with AI.

Should you invest in the market’s largest stocks?

While a large market cap tells you what investors think about a company, it doesn’t necessarily tell you that a company is a slam-dunk investment. Huge companies such as General Electric topped the list of largest market caps at one point – in 2005, to be exact – but the company has delivered miserable returns in the interim, regardless of its size previously.

However, a large market capitalization does offer you a few pieces of information:

• Strong historical stock performance: A high market capitalization shows that the stock has done well historically, though it does not offer definitive evidence of how well the stock will do from here forward.
• High investor expectations: Besides strong historical performance, the high market cap also tells you that investors have confidence in and expect strong performance in the future, though it must be left to time as to whether the stock actually delivers.
• Strong financials: By awarding a company a large market cap, investors are saying that a company is strong financially, and they’re giving it a liquid stock currency that could be issued to raise money for expansion or other purposes.

So the stock price tells you what investors think about the company, but you’ll need to dig into the details yourself to see which direction you think the company is headed. Investing in individual stocks requires a lot of time and effort, and those looking for an easier way to buy the market’s top companies can simply purchase an S&P 500 index fund. This index includes the big names above, and has returned about 10 percent annually over time.

Bottom line

Many of the market’s largest stocks continue on delivering solid returns to investors for years, but they don’t guarantee future investing success. Still, the largest stocks can be a good hunting ground for future returns, since good companies tend to keep on delivering good returns.