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Mirror, Mirror, Wall: Who is the biggest company? It may seem like an easy question to answer. Just use the Stocks screen, which sorts by descending market cap.
For most of the last few years, apple (NASDAQ:AAPL) It claimed the largest market capitalization of all listed companies. Thanks to the huge tailwind of generative AI, microsoft (NASDAQ: MSFT) It took over the number one spot in early 2024. With this AI enhancement, Nvidia (NASDAQ:NVDA) Within firing range from the top position.
But the real answer to the question depends on how you define “maximum”. Warren Buffett recently discussed the largest companies based on net assets as measured by Generally Accepted Accounting Principles (GAAP). And it’s not Apple, Microsoft, or Nvidia.
What is GAAP net assets?
GAAP net assets are better known by another name: book value. Sometimes called stockholders’ equity.
Calculating GAAP net assets is easy.
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Determine the company’s total assets (listed on the balance sheet).
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Determine the total debt of the company (also listed on the balance sheet)
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Subtract total liabilities from total assets to obtain GAAP net assets.
There is also an even simpler way to find a company’s GAAP net worth. Look at the value of total shareholders’ equity on the balance sheet.
Microsoft’s market capitalization exceeds $3 trillion. However, the tech giant’s GAAP net worth is much lower than that at $238.3 billion.
It’s a similar story for Apple. The iPhone maker’s market capitalization exceeds $2.6 trillion. However, Apple’s GAAP net worth is only $74.1 billion.
For Nvidia, the difference is even more pronounced. The chipmaker’s market capitalization has soared to more than $2.3 trillion, but its GAAP net assets are just under $43 billion.
biggest ever
So if the largest companies based on GAAP net worth aren’t Microsoft, Apple, or Nvidia, which company holds the number one spot? Since we mentioned Buffett earlier, who’s the winner in the US? You can probably guess.it is his own berkshire hathaway (NYSE: BRK.A) (NYSE: BRK.B).
At the end of 2023, Berkshire Hathaway’s GAAP net assets totaled nearly $561.3 billion. This conglomerate is more than twice the size of Microsoft’s based on metrics. It is nearly 7.6 times larger than Apple and more than 13 times larger than Nvidia.
In his latest letter to Berkshire shareholders, Buffett said Berkshire has the largest GAAP net worth in the history of a U.S. company. He estimates that his total GAAP net assets are S&P500 The total amount excluding Berkshire in 2022 was $8.9 trillion. The total for 2023 has not yet been calculated, but Buffett believes it will not be much higher than $9.5 trillion. He noted that Berkshire alone accounts for about 6% of the S&P 500’s total GAAP net assets.
But while Berkshire has the largest GAAP net worth of any U.S. company, there are even larger companies outside the United States. The giant oil and gas producer’s GAAP net worth as of September 30, 2023 saudi aramco The total amount is $1.75 trillion.
A better metric than market capitalization or GAAP net worth
Why don’t we get more evidence that Berkshire Hathaway and Saudi Aramco are the largest companies by GAAP net worth? There are several drawbacks to using financial indicators. For example, asset values may be undervalued or overvalued. Intangible assets are particularly difficult to value accurately.
Market capitalization still matters. But we think there’s an even better measure for determining the biggest companies: enterprise value (EV). This metric adds a company’s market capitalization and subtracts its cash and equivalents from its total debt.
Who are the largest mega-cap companies based on EV? Microsoft comes out on top, as is the case based on market cap.
But for investors, how much a company can grow is more important than how big it is now. There are many stocks that are likely to grow faster than Microsoft, Saudi Aramco, and Berkshire Hathaway.
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Keith Speights has held positions at Apple, Berkshire Hathaway, and Microsoft. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Microsoft, and Nvidia. The Motley Fool recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
Which mega-cap stock has the highest GAAP net worth? Hint: It’s not Microsoft, Apple, or Nvidia.Originally published by The Motley Fool
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