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2024.08.05

Word count: 4661, reading time: about 7 minutes

Introduction: Which technology companies are the most profitable?

Author |First Financial News Liu Jia Fan Xuehan Lu Hanzhi Chen Yangyuan Li Na Qian Tongxin Wang Zhen

The latest Fortune Global 500 list was released on August 5. The total operating income of the companies on this year's Fortune Global 500 list is about 41 trillion US dollars, equivalent to one-third of the global GDP, a slight increase of about 0.1% over last year.

The overall profits of the 500 companies are back on track. In 2023, the total profits of the world's top 500 companies will be close to 3 trillion US dollars, an increase of 2.3% over the previous year.

Among the top ten companies, Amazon and Apple are on the list, ranking 2nd and 7th respectively, while Google and Microsoft are ranked 17th and 26th respectively. Nvidia is on the list for the first time and ranks 222nd, the highest ranking among the companies that made the list for the first time this year.

Top-ranked Chinese technology companies include Hon Hai Precision Industry (32), JD.com (47), China Mobile (55), Alibaba (70), and Huawei (103).

Internet companies rose overall. Among China's five Internet giants, Alibaba dropped two places, while JD.com, Tencent and Meituan all improved their rankings. Pinduoduo made the list for the first time, ranking 442nd with $34.98 billion. Benefiting from the recovery of China's Internet industry, Meituan became the Chinese company with the largest ranking increase in the list, jumping 83 places to 384th. JD.com, ranked 47th, entered the top 50 for the first time.

Which tech companies are the most profitable?

The Fortune Global 500 list classifies all companies according to their business areas. The five major industries of finance, energy, vehicles and parts, high technology and healthcare account for 60% of the total number of companies on the list and 65% of the total revenue. Among them, the operating profit rate of high-tech companies ranks among the best industries.

The list shows that there are 33 high-tech companies on the Fortune Global 500 list in 2024, with an average operating income of $88.2 billion and an average profit of $14.6 billion. Among these 33 high-tech companies, there are 16 American high-tech companies, with an average operating income of $102.6 billion and a profit of $23.6 billion. Apple, Alphabet, Microsoft and Meta Platforms alone created a net profit of $282.2 billion. In the past year, these companies have also launched large-scale layouts in the field of generative artificial intelligence. Take Microsoft as an example. Since 2023, Microsoft has cooperated with the startup OpenAI to increase its investment in large models and artificial intelligence technology many times, and the company's stock price has continued to rise.

In addition, there are 17 non-U.S. high-tech companies (including 6 from mainland China), with an average operating income of US$74.6 billion and an average profit of US$6.3 billion.

In the list of the 50 most profitable companies (profit list), three American technology companies, Apple, Google's parent company Alphabet and Microsoft, ranked second, fourth and fifth respectively. Among Chinese technology companies, TSMC, Tencent and China Mobile were on the list.

On the return on equity (ROE) list, Home Depot retained the top spot with a return on equity of over 1,450%, while technology company Oracle jumped to second place with a return on equity of over 792%; Apple ranked fourth.

In terms of ROE, the top 10 technology companies among Chinese companies include Pinduoduo Holdings, TSMC, CATL, Quanta Computer, Midea, Luxshare Precision, and Lenovo Group.

It is worth noting that among the top five companies with the highest profit margins, three are from the semiconductor and electronic components industry, namely Nvidia, TSMC and Broadcom, ranking second to fourth.

Take Nvidia, which made the list for the first time, as an example. The company’s revenue last year reached US$60.9 billion. The company provides more than 80% of the advanced process chips for the training of generative artificial intelligence models and is at the core of a new "industrial revolution."

In addition, Tesla's ranking on the list jumped 42 places from the previous year to 110th. The company's revenue last year was nearly $96.8 billion. Currently, Tesla CEO Musk still tops the list of the world's richest people. In June this year, Tesla shareholders voted to approve a $56 billion salary package for Musk, becoming the largest incentive package in the history of American companies.

In 2018, Musk accepted a pay bet agreement, that is, when the company's value increased by 1,900% in 6 years, Musk would receive about 9% of the shares as a reward. In response to this bet earlier this year, Musk said: "If the CEO of a company accepts the conditions I have, you must buy the stock of this company! You can propose such a performance target to any CEO of a Fortune 500 company, and no one will accept it."

Pinduoduo entered the list for the first time, while Meituan rose the fastest

Among the e-commerce companies on the list, Amazon, which dropped to fourth place last year, returned to second place, second only to Walmart.

Amazon's net sales increased by 12% to $574.8 billion in 2023, of which AWS sales increased by 13% year-on-year to $90.8 billion. The company's net profit in 2023 was $30.4 billion, successfully turning losses into profits.

However, regarding consumption trends, Amazon executives recently said that consumers are more cautious and prefer low-priced products. In the e-commerce business, Amazon faces competition from companies such as Temu and SHEIN, which provide low-cost goods through supply chains directly from factories and industrial belts.

In addition, Amazon plans to continue layoffs this year and faces an antitrust investigation.

Among Chinese e-commerce companies, Pinduoduo made it onto the Fortune Global 500 list for the first time this year.

The financial report shows that in 2023, Pinduoduo's annual revenue increased by 90% year-on-year. In the first quarter of 2024, its revenue reached 86.8 billion yuan, a year-on-year increase of 131%, and its net profit increased by 246% year-on-year.

Currently, Duoduo Cross-border has covered 70 countries and regions in North America, Oceania, Europe, Asia, etc. Whether in China or overseas, "low prices" have brought Pinduoduo a rapid growth in revenue and order volume. How to balance the interests of merchants and supply chains under "low prices" is an important challenge for Pinduoduo at present.

Among Chinese e-commerce companies, Alibaba ranks 70th, down two places compared to last year. In the past year, Alibaba’s U.S. stock market value was surpassed by Pinduoduo for the first time. Compared with its peers, Alibaba has encountered challenges in maintaining growth. In fiscal year 2024, Ali's revenue increased by 8% year-on-year, and operating profit increased by 13% year-on-year. In the fourth quarter, Ali's operating profit and adjusted EBITA both declined year-on-year.

In the past year, Alibaba has completed the "1+6+N" organizational transformation. Wu Yongming succeeded Zhang Yong as CEO of Alibaba Group and Chairman and CEO of Alibaba Cloud. At the same time, Wu Yongming also "took over" from Dai Shan as Chairman and CEO of Taotian Group. Alibaba Chairman Joseph Tsai once said, "Alibaba has fallen behind in the past few years. We have forgotten who the real customers are." Alibaba is now back to coordinating the forces of various businesses, making "revitalizing Taotian" the highest priority task, and sticking to the path of e-commerce and cloud computing as core businesses. Attacking the "big company disease" and maintaining entrepreneurial spirit have become important challenges for Alibaba.

JD.com entered the top 50 for the first time. The company's annual revenue last year was 1,084.7 billion yuan, a year-on-year increase of 3.7%. In 2023, JD.com's net profit was 24.2 billion yuan, a year-on-year increase of 133%. On the one hand, JD.com has shrunk some loss-making businesses; on the other hand, JD.com has strengthened its refined operations. In the past year and a half, JD.com has been constantly adjusting from employee income, business structure to overall strategy.

Meituan, which made its debut on the list last year, became the Chinese company with the largest ranking improvement. Meituan achieved revenue of 276.7 billion yuan last year, a year-on-year increase of 26%, and turned losses into profits.

Judging from the financial report, Meituan’s core local business (including food delivery, in-store hotels and travel, Meituan flash sales, homestays, and transportation ticketing) has gradually recovered last year, with annual revenue increasing by 29% to 206.9 billion yuan and operating profit of 38.7 billion yuan, a year-on-year increase of 31.2%.

Meituan's stock price is relatively sluggish in 2023. The industry believes that on the one hand, the consumption environment is still recovering, and on the other hand, the local life business faces challenges from platforms such as Douyin and Kuaishou. Since the beginning of this year, Meituan has announced a new organizational structure adjustment, integrated multiple core local business-related businesses, and further increased the priority of technology and internationalization-related businesses.

Huawei ranked 103rd

Huawei remains the leading Chinese company in the communications field, ranking 103rd on the list, up from 111th last year.

Huawei has experienced great ups and downs in the past few years. Its terminal revenue once fell from 483 billion yuan to 214.5 billion yuan. Last year, Huawei's terminal business revenue was 251.5 billion yuan, returning to the growth channel for the first time in three years. According to previously published data, Huawei will achieve global sales revenue of 704.2 billion yuan and net profit of 87 billion yuan in 2023. Among them, the terminal business has become an important support point for Huawei's profit growth at this stage.

However, from the perspective of sustainable development, Huawei still faces challenges brought by a complex external environment. From the normalization of sanctions to normal operations, from survival to development, how Huawei can build a more resilient supply chain capability and ensure high-quality business continuity and product competitiveness is the core of future sustainable development.

Foxconn's parent company Hon Hai Precision Industry Co., Ltd. is Apple's largest contract manufacturer, but it dropped from 27th place last year to 32nd place this year. Another contract manufacturer giant, Pegatron, also dropped from 333rd place last year to 375th place this year.

Last year, Hon Hai Precision's performance was under pressure due to weak sales of consumer electronics products such as Apple, but driven by global demand for artificial intelligence servers and other related businesses, Hon Hai Precision's performance has rebounded significantly. It is expected that in 2024, artificial intelligence servers will account for more than 40% of its overall server revenue.

Xiaomi's ranking also dropped from 360 last year to 397 this year. Xiaomi has officially entered the new energy smart car field. Fortune said that the revenue from the automotive business will also have an impact on the company's future ranking on the list.

In addition, advanced manufacturing company Luxshare Precision has made it onto the Fortune Global 500 list again this year after making its debut last year, but its ranking has also dropped from 479th last year to 488th this year.

Semiconductor companies' rankings generally declined

In the past year, the sluggish consumer electronics market and the popularity of artificial intelligence have been the main themes of the semiconductor industry. After comparing the Fortune Global 500 list in recent years, the reporter found that in the overall list, the rankings of global semiconductor companies and advanced manufacturing companies continued last year's downward trend. However, among a number of chip design companies, affected by the AI ​​craze, Nvidia successfully made the list, Broadcom's ranking rose, and it was on the profit margin list.

In terms of semiconductor manufacturing giants, Samsung Electronics is still the highest ranked, but the company ranked 31st this year, down six places from last year; the ranking of another semiconductor manufacturing giant, Intel, also continued to decline, from 145th in the previous year to 211th last year and to 261st this year; TSMC's ranking fell this year after a brief rise in 2023, from 168th last year to 186th this year.

From the ranking changes, we can see that although the three foundry giants are competing fiercely in the industry, they are still affected by the market cycle as a whole. The latest research by market research firm TrendForce shows that in 2023, due to high supply chain inventory, weak global economy, and slow market recovery, the foundry industry is in a downward cycle, and the top ten foundries' revenue will decrease by about 13.6% year-on-year to US$111.54 billion.

Unlike wafer manufacturers and semiconductor foundries, semiconductor IC design companies, especially those related to AI chips, have seen significant improvements in their rankings on the list.

Among them, Nvidia, the "first stock" in AI, has entered the Fortune Global 500 list for the first time in many years, ranking 222nd. Benefiting from the strong demand for computing power in the artificial intelligence market, Nvidia is currently in the limelight in the GPU chip market. On June 13, 2023, Nvidia's market value exceeded $1 trillion. On February 23, 2024, the company's market value exceeded the $2 trillion mark at an astonishing speed, setting a record for the fastest growth from $1 trillion to $2 trillion.

According to the latest research report from semiconductor analysis firm TechInsights, Nvidia achieved explosive growth in data center GPU shipments in 2023, with total shipments of approximately 3.76 million units, an increase of more than one million units compared to 2.64 million units in 2022.

Similarly, benefiting from its AI business, Broadcom's ranking on the list has also risen by 35 places this year. Broadcom CEO Hock Tan recently said that Broadcom's performance was driven by the demand for artificial intelligence and VMware's business. He expects that Broadcom's total revenue from artificial intelligence products will exceed US$11 billion in fiscal 2024.

A report by Trendforce shows that thanks to artificial intelligence, the world's top ten IC design companies will have a combined revenue of approximately US$167.7 billion in 2023, a year-on-year increase of 12%.

White goods giant Gree fails to make the list again

In the home appliance industry, Midea and Haier rose in the rankings, while Gree fell off the list again.

Among them, Midea Group has been selected for nine consecutive years, ranking 277th, one place higher than in 2023. In 2023, Midea Group's total operating revenue reached 373.7 billion yuan, an increase of 8% year-on-year, and its profit reached 33.7 billion yuan, an increase of 14% year-on-year, showing its operating resilience and growth trend. It is worth noting that its ToB business revenue, such as new energy and industrial technology, intelligent building technology, robotics and automation, accounted for more than 25% of the total revenue, reaching 97.8 billion yuan, and the "second engine" continued to grow at a high rate.

Haier Smart Home's ranking rose by 12 places from last year to 407th; its revenue last year reached 261.4 billion yuan, a year-on-year increase of 7.32%, and its net profit was 16.597 billion yuan, a year-on-year increase of 12.8%; through the high-end brand Casarte and the scene brand Sanyi Bird, Haier Smart Home expanded its business and increased profits.

Gree Electric Appliances' revenue once again exceeded 200 billion yuan last year, setting a new record for its own performance. However, as air conditioners continue to be its main business and its revenue growth rate is slower than that of its main competitors, it still failed to make the Fortune Global 500 list last year.

WeChat Editor| Rainforest