The success of large companies has driven the stock market to produce impressive financial figures over the past year, with major companies dominating through sheer market capitalization. This is phenomenon is known as the “mega cap” phenomenon, and it is continuing to pick up steam as 2021 progress.
Market capitalization, which is also known as “market cap,” is a measure of a company’s total value. It essentially takes a company’s stock price and multiplies it by the number of shares outstanding. This gives you a better idea of the total value of a company, and that usually determines how large a company is.
There are a few major companies that have emerged as the main contributors to the mega cap phenomenon. Amazon, Microsoft, Apple, Google, and Facebook have led the way in terms of market cap, with Amazon leading the pack with a market cap of over $1.6 trillion.
These five companies, known as FAAMG (Facebook, Amazon, Apple, Microsoft, and Google), have become so large and so influential that they are having a large impact on the stock market. The FAAMG stocks have combined to make up over a third of the S&P 500, and they account for approximately 15% of the entire stock market.
The sheer size of these companies has allowed them to dominate the stock market and to take on large acquisitions, purchases, and investments. This trend is only expected to continue, as these companies have the financial clout to make large purchases and acquisitions.
The mega cap trend is also being noticed in other sectors, such as oil and gas, banking and finance, and healthcare. While the FAAMG companies remain at the top, other big players such as paypal, Chevron, Walmart, and Johnson & Johnson have also seen jumps in their market cap.
At the end of the day, the market cap of these large companies is a reflection of their success. With the growth of these companies, it is easy to see why investors are drawn to them and why they are dominating the stock market in terms of market cap.