Mirror, mirror, on the wall, what's the biggest company of all? That might seem like an easy question to answer. Just use a stock screen that sorts by descending market cap.
For much of the past few years, Apple (AAPL -0.35%) claimed the biggest market cap of all publicly traded companies. Thanks to a huge generative AI tailwind, Microsoft (MSFT 1.82%) took over the No. 1 spot earlier in 2024. This AI boost has also put Nvidia (NVDA 6.18%) within striking distance of the top position.
But the real answer to the question depends on how you define "biggest." Warren Buffett recently discussed the biggest company based on net worth as measured by generally accepted accounting principles (GAAP). And it isn't Apple, Microsoft, or Nvidia.
What is GAAP net worth?
GAAP net worth is better known by another name -- book value. It's also sometimes referred to as shareholder's equity.
The calculation of GAAP net worth is straightforward:
- Determine a company's total assets (found on its balance sheet)
- Determine the company's total liabilities (also on the balance sheet)
- Subtract total liabilities from total assets to get the GAAP net worth
There's also an even simpler way to find a company's GAAP net worth. Just look at the value for total stockholders' (or shareholders') equity on the balance sheet.
Microsoft's market cap tops $3 trillion. The tech giant's GAAP net worth, though, is a much lower $238.3 billion.
It's a similar story for Apple. The iPhone maker has a market cap of more than $2.6 trillion. But Apple's GAAP net worth is only $74.1 billion.
The difference is even more pronounced for Nvidia. Although the chipmaker's market cap has skyrocketed to over $2.3 trillion, its GAAP net worth is a little under $43 billion.
The biggest by far
So if the largest company based on GAAP net worth isn't Microsoft, Apple, or Nvidia, which company holds the No. 1 spot? Since I mentioned Buffett earlier, you can probably guess who the U.S. winner is. It's his own Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%).
As of the end of 2023, Berkshire Hathaway's GAAP net worth stood at nearly $561.3 billion. The conglomerate is more than twice the size of Microsoft based on the metric. It's nearly 7.6 times bigger than Apple and over 13 times larger than Nvidia.
Berkshire boasts the largest GAAP net worth by far of any U.S. business in history, according to Buffett in his latest letter to Berkshire shareholders. He noted that the total GAAP net worth for the S&P 500 excluding Berkshire was $8.9 trillion in 2022. While the total hasn't been calculated yet for 2023, Buffett doesn't think that it will be much higher than $9.5 trillion. He pointed out that Berkshire by itself makes up roughly 6% of the total GAAP net worth of the entire S&P 500.
But while Berkshire has the biggest GAAP net worth among U.S. companies, there's a company outside the U.S. that's even bigger. As of Sept. 30, 2023, the GAAP net worth for giant oil and gas producer Saudi Aramco totaled $1.75 trillion.
A better metric than market cap or GAAP net worth
Why don't Berkshire Hathaway and Saudi Aramco get more props for being the biggest companies based on GAAP net worth? There are some drawbacks to using the financial metric. For example, asset values can sometimes be understated or overstated. Intangible assets are especially tricky to accurately value.
Market cap still matters. However, there's perhaps an even better measurement for determining the biggest companies -- enterprise value (EV). This metric adds a company's market cap and its total debt then subtracts cash and equivalents.
What's the biggest megacap company based on EV? Microsoft comes out on top, just as it does based on market cap.
For investors, though, how much a company can grow is more important than how big it is now. There are plenty of stocks that are likely to grow faster than Microsoft, Saudi Aramco, or Berkshire Hathaway.
