Despite Apple (NASDAQ: AAPL) starting 2024 slow in the stock market, a series of developments around the Cupertino-based technology giant, including the continuously strong demand for its products in China, as well as a partnership with OpenAI, have helped AAPL shares rocket since June.
The stock market rally enabled the iPhone maker to reclaim its top spot as the world’s most valuable company, with a market capitalization of $3.594 trillion as of July 16, 2024.
In particular, Finbold’s research, based on market cap data and employee figures available as of July 16, 2024, found that the big tech firm’s two-month rise resulted in each of Apple’s 161,000 workers having their own effective market cap of $22.3 million.
For comparison, Amazon (NASDAQ: AMZN), the world’s fifth-biggest company by market cap, has its employees valued at $1.3 million, approximately 20 times less than Apple’s.
Why Amazon’s employees are valued at only a fraction of Apple’s
Notably, the differences between Apple and Amazon strongly demonstrate the high impact of more novel business models that mostly rely on software for scale.
Still, it is worth pointing out that Amazon’s low figures are not so much a result of its lack of advanced software but can largely be attributed to its vast workforce.
The technology and e-commerce giant employs 1.5 million people to run its warehouses, data centers, entertainment divisions, and numerous other services.
How AI technology helped Nvidia outshine bigger companies
Finbold’s research also uncovered the power of focusing on pivotal industries and technologies in the modern world. Nvidia (NASDAQ: NVDA), a company whose range of services is dwarfed by Apple’s but not its utility, boasts the most ‘valuable’ workforce.
Indeed, after its market cap rose some $2.5 trillion since the artificial intelligence (AI) boom began in earnest with the launch of ChatGPT in late 2022, Nvidia’s employees became worth more than $106 million each – four times as much as Apple’s.
Despite the clearly visible trends, more traditional companies are themselves no laggards when it comes to their valuations and, by extension, the valuation of their workers.
The oil giant Saudi Aramco (TADAWUL: 2222), itself a long-time contender for the biggest company in the world, has each of its 73,000 employees calculated as worth $24 million – second only to Nvidia and $2 million ahead of Apple.
Why Amazon’s valuation may be a problem
However, calculations estimating the value of a company’s workforce as extracted from a firm’s market capitalization also present the opportunity for a darker reading.
While large-cap companies and their growth are generally seen as a sign of an economy’s strength, certain differences apparently reinforce the fears that a bubble has formed around AI.
For example, though Nvidia is arguably worthy of its popularity and prominence, it registers as strange that TSMC (NYSE: TSM) has not only its market cap but also its employee valuation dwarfed by the other blue-chip chipmaker.
This fact is particularly pointed as TSM is one of the most important semiconductor manufacturers in the world and is generally considered a company pivotal for United States national security.
Additionally, while Amazon’s relatively low worker worth compared to its overall market cap does not appear anomalous given the vast workforce, it offers insights into the power of investor perception.
Indeed, Amazon is, in many ways, as crucial for the AI boom as Nvidia due to its AWS data centers and cloud services, meaning it can also be credibly viewed as an artificial intelligence company and experience a rally akin to other similar stocks.
A similar case can be made around the comparatively low capitalization of Aramco and Eli Lilly (NYSE: LLY).
Both companies whose importance for the everyday operations of humanity is significantly greater than that of artificial intelligence technology or even ubiquitous smartphones, and their vastly lower employee valuations, despite the workforce being only modestly larger, serve to demonstrate that how exciting a corporation is can carry significantly more weight than how crucial it is.
