The $1 Trillion Market Cap Race Is a Zero Sum Game
The stock market values of a few technology companies are increasing at the expense of legacy businesses.
The race to $1 trillion is in high gear.
Photographer: Lionel Bonaventure/AFP
Amazon.com Inc. said Thursday that it bought online pharmacy company PillPack. It also said it was starting a program to recruit local entrepreneurs to make “last mile” package deliveries. Amazon’s share price promptly soared, pushing its stock market value up by $20 billion to $825.6 billion on the day. Alternatively, Walgreens Boots Alliance Inc., Rite-Aid Corp., Cardinal Health Inc., AmerisourceBergen Corp., CVS Health Corp. and Walmart Inc. saw their values drop by a collective $17.5 billion, while FedEx Corp. and United Parcel Service Inc. declined $3 billion.
This seemingly zero-sum outcome underscores how disruptive technology companies are taking market capitalization away from legacy businesses and adding it to their own. They have been so successful that a handful of these technology companies are rapidly closing in on becoming the first to reach $1 trillion in market capitalization on a sustainable basis. Nothing in the last 50 years has seen a period like the current one. As the chart below shows, Petro China briefly became the first company with a $1 trillion stock market value a decade ago, but that was a unique situation.