Amazon in Race for Market Cap Lead

By Douglas A. McIntyre Updated Jan 11, 2:16PM EST · Published Dec 1, 8:15AM EST

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Amazon in Race for Market Cap Lead — © JurgaR / Getty Images

Now that Microsoft Corp. (NASDAQ: MSFT) has passed Apple Inc. (NASDAQ: AAPL) in total market cap, what are the chances that the number three company by the same measure can catch up? Amazon.com Inc. (NASDAQ: AMZN), which holds this third place, is getting close to the two leaders.

Microsoft’s market cap is $851 billion. Apple’s is $847 billion. Amazon trails with a market cap of $826 billion.

Microsoft’s run to the top is based on its success across several businesses. Its cloud operation trails Amazon’s but is still a force in the sector. Its traditional server and office enterprise products remain the leaders across the tech world. It is also the dominant personal computer operating system and has successfully entered the personal computer hardware industry. Microsoft additionally owns the Bing search engine, LinkedIn and MSN portal business.

Apple’s largest problem and the reason it has fallen from the top spot is slowing iPhone sales. They remain the largest part of Apple’s revenue by far. Of its $62.9 billion in revenue last quarter, $37.2 billion came from iPhones. Mac and iPad sales were nowhere close. Neither was Apple’s service business, which many experts believe will be the key to Apple’s future growth.

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The reason Amazon could catch both market cap leaders is that several of its businesses continue to grow rapidly. This is particularly true of its Amazon Web Services operation, the largest cloud business in the world. Of Amazon’s $43.7 billion of revenue last quarter, AWS was $6.7 billion. While it is a relatively small portion of overall sales, it is Amazon’s fastest growing operation. Amazon is the leader of U.S. e-commerce by far. More important, some of the parts of this business dominate its industry. Amazon has over 100 million Prime members worldwide. Each of these pays a subscription fee, a key to recurring revenue. Amazon is also a leader in streaming media and artificial intelligence software used in the home.

While each of the three companies holds a leadership position across several sectors, Amazon’s cloud business may be its trump card. Wall Street views the cloud business as one primary reason huge tech companies can continue to grow rapidly. That is why Amazon has a chance to pass both Apple and Microsoft in market value.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.