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The 8 Largest Companies on the Stock Market

By Rich Duprey - Dec 10, 2020 at 9:00AM
Sunlight through trees in a forest.

The 8 Largest Companies on the Stock Market

Standing above the rest

The total capitalization of the U.S. stock market is $38.5 trillion, covering all U.S.-based companies listed on the New York Stock Exchange and Nasdaq exchange.

The eight largest U.S. stocks on those two exchanges have a combined market cap of almost $8.9 trillion, meaning of the approximately 6,300 stocks listed, this small handful of companies -- 0.001% of the total number of stocks -- accounted for almost one-quarter, or 23%, of the total value.

Here are the eight mighty redwoods that are standing tall above the scrub pines of the rest of the forest.

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Hand holding a blue Visa card in front of a POS device.

1. Visa (market cap: $453.5 billion)

Payment processor Visa (NYSE: V) has proved to be an all-weather stock during the pandemic, benefiting as sales transferred from physical retail stores to online. And as the economy was allowed to reopen, Visa transitioned back once more.

Although the loss of travel and tourism dollars still weighs on performance, since that's a large part of how it and rival Mastercard generate lots of transaction fees, the sustained shopping for household staples ensures the company remains a big part of the economic landscape.

With a 42% market share in connecting financial institutions to merchants, compared with Mastercard's 25%, Visa looks like it will dominate the payments landscape for years to come.

ALSO READ: Got $2,000? 3 Stocks to Buy When the Market Crashes Next

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A black Tesla Model 3

2. Tesla ($556.4 billion)

The importance Tesla (Nasdaq: TSLA) has taken on in the market and with investors is underscored by its coming addition to the S&P 500 index. It signals that the electric-car maker has arrived as a key automotive manufacturer.

The market has certainly rewarded Tesla by giving it a valuation that is more than four times greater than that of Ford, General Motors, and Fiat Chrysler combined. Momentum continues moving in its direction, and even noted short-seller Jim Chanos says it's become "impossible" to short Tesla's stock.

That's probably why his peer, billionaire investor Ron Baron, says it won't be long before Tesla becomes a $2 trillion company.

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Warren Buffett smiling.

3. Berkshire Hathaway ($544.8 billion)

It's not surprising to find Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) on the list of largest companies. Over the past half century, Warren Buffett has helped his holding company generate returns for investors of 2.7 million percent, a crazy number that's hard to wrap your head around.

Of course, that has some investors worried about what happens once the 90-year-old Buffett passes on. While he has set up a succession plan and Berkshire's recent performance is partially a result of the investment managers he's installed, and not just his own, it remains a risk factor for the stock for the long term.

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Woman with a social media like and a smartphone

4. Facebook ($790.3 billion)

The social networking platform everyone loves to hate, Facebook (Nasdaq: FB) has become part of the fabric of our culture, but the subtle growth of this company is built on its success at being able to monetize its platform.

Facebook has become adept at using people's desire for connection to turn a profit, making it difficult for them to cut the cord even when they want to. Whether its Instagram, Messenger, or WhatsApp, CEO Mark Zuckerberg has used the engagement these apps provide as a means creating a dominant platform, one that attracts 3.2 billion active monthly users across its services.

Facebook still generates double-digit revenue and profit growth despite its massive size, and it will likely remain embedded in our social consciousness for a very long time to come.

ALSO READ: Facebook Stock: What Will 2021 Look Like?

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The outside of Google's campus

5. Alphabet ($1.25 trillion)

Alphabet (Nasdaq: GOOG)(Nasdaq: GOOGL) has come a long way since it was the simple search engine Google, but it has built that into a near monopoly that fuels a tech empire driven by advertising dollars.

With over 90% market share in search, it is the first stop for advertisers in placing ads across its properties, just ahead of Facebook. Its YouTube video platform has become one of the top three most-visited social media sites, and its cloud-based service is growing at a meteoric rate, itself becoming the third-largest provider in the cloud infrastructure market.

Like other tech companies, it comes in for its fair share of criticism for its dominance, but investors still like its chances for future growth.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Previous

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Amazon delivery worker hands a box to a customer.

6. Amazon.com ($1.58 trillion)

Another giant that has risen from humble roots, Amazon.com (Nasdaq: AMZN) is today becoming known just as much for its cloud services as it is for its e-commerce excellence. It is the No. 1 place consumers begin their online search for products, and its Amazon Web Services is the largest provider of internet backbone technology, driving not only its own business but those of major corporations and governments.

Amazon has come to define the consumer discretionary sector of the economy, alone accounting for 43% of its performance and skewing the sector's direction for certain investors looking for a safe haven to cycle into.

Yet Amazon has branched out into transportation and logistics, with a fleet of cars, vans, trucks, planes, and even ships. It's becoming harder to go through one's day with not encountering the e-commerce giant.

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Microsoft Xbox Series X and S.

7. Microsoft ($1.61 trillion)

Yet another in the long list of companies that have far outstripped their origins, Microsoft (Nasdaq: MSFT) is today much more than simply the software maker of yore. As the second-largest cloud services provider behind Amazon (and ahead of Alphabet), Microsoft's Azure is also growing at warp speed, increasing sales last quarter by 48% as part of the tech giant's massive $13 billion intelligent cloud segment.

While those rates of growth are slowing, it's still a prime growth opportunity, right alongside Microsoft's "more personal computing" division. Xbox alone saw a 30% increase in sales, and that was before the debut of the Xbox Series X and S consoles. The upgrade cycle should drive revenue even higher in the quarters ahead.

ALSO READ: 4 Stocks to Bankroll Your Retirement

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Artist's rendition of an Apple store.

8. Apple ($2.07 trillion)

It took Apple (Nasdaq: AAPL) 18 years to become a trillion-dollar stock, then only two years more to cross the $2 trillion threshold and become the most valuable stock in the world.

Over the years, pundits have written off the potential for Apple to grow more many times, routinely predicting a demise in sales for its computers, iPhones, and other consumer electronic gear. Each time, though, Apple has confounded the experts and is likely to continue doing so.

Its iPhones remain must-have devices, its Mac computers just recorded record revenue, iPad sales continue to soar, the Apple Watch is a wearables mainstay, and it is looking to become a contender in the video streaming wars with Apple TV+.

That Apple is also the largest holding of Berkshire Hathaway suggests even Warren Buffett thinks the tech stock still has more opportunities to surprise the markets.

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Acorn

From tiny acorns

All these market titans started off as tiny businesses, sometimes as just a side hustle in someone's garage. You can be sure tomorrow's monster stock is out there right now, plotting its path toward overtaking these giants.

Yet they're not going to spring up right away and you won't find them among the penny stocks. Instead, investors should look for real companies, with real business models, that have proven that consumers want their products and services through sales and possibly -- though not necessarily -- profits.

Investing early in these seedlings may mean that one day your portfolio is filled with giant oaks towering over the stock market.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Facebook, Mastercard, Microsoft, Tesla, and Visa and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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