Technology

How Big Tech Revenue and Profit Breaks Down, by Company

Published

9 months ago

September 13, 2022

Truman Du

Featured Creator

Article/Editing:

Carmen Ang

In the media and public discourse, companies like Alphabet, Apple, and Microsoft are often lumped together into the same “Big Tech” category. After all, they constitute the world’s largest companies by market capitalization.

And because of this, it’s easy to assume they’re in direct competition with each other, fiercely battling for a bigger piece of the “Big Tech” pie. But while there is certainly competition between the world’s tech giants, it’s a lot less drastic than you might imagine.

This is apparent when you look into their various revenue streams, and this series of graphics by Truman Du provides a revenue breakdown of Alphabet, Amazon, Apple, and Microsoft.

How Big Tech Companies Generate Revenue

So how does each big tech firm make money? Let’s explore using data from each company’s June 2022 quarterly income statements.

Alphabet

breakdown of Alphabet's revenue streams and profit

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In Q2 2022, about 72% of Alphabet’s revenue came from search advertising. This makes sense considering Google and YouTube get a lot of eyeballs. Google dominates the search market—about 90% of all internet searches are done on Google platforms.

Amazon

breakdown of amazon's revenue streams and profit

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Perhaps unsurprisingly, Amazon’s biggest revenue driver is e-commerce. However, as the graphic above shows, the costs of e-commerce are so steep, that it actually reported a net loss in Q2 2022.

As it often is, Amazon Web Services (AWS) was the company’s main profit-earner this quarter.

Apple

breakdown of Apple's revenue streams and profit

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Apple’s biggest revenue driver is consumer electronics sales, particularly from the iPhone which accounts for nearly half of overall revenue. iPhones are particularly popular in the U.S., where they make up around 50% of smartphone sales across the country.

Besides devices, services like Apple Music, Apple Pay, and Apple TV+ also generate revenue for the company. But in Q2 2022, Apple’s services branch accounted for only 24% of the company’s overall revenue.

Microsoft

breakdown of Microsoft's revenue streams and profit

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Microsoft has a fairly even split between its various revenue sources, but similarly to Amazon its biggest revenue driver is its cloud services platform, Azure.

After AWS, Azure is the second largest cloud server in the world, capturing 21% of the global cloud infrastructure market.

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

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Technology

Nvidia Joins the Trillion Dollar Club

America’s biggest chipmaker Nvidia has joined the trillion dollar club as advancements in AI move at lightning speed.

Published

4 days ago

May 30, 2023

Dorothy Neufeld

Nvidia Joins the Trillion Dollar Club

Chipmaker Nvidia is now worth nearly as much as Amazon.

America’s largest semiconductor company has vaulted past the $1 trillion market capitalization mark, a milestone reached by just a handful of companies including Apple, Amazon, and Microsoft. While many of these are household names, Nvidia has only recently gained widespread attention amid the AI boom.

The above graphic compares Nvidia to the seven companies that have reached the trillion dollar club.

Riding the AI Wave

Nvidia’s market cap has more than doubled in 2023 to over $1 trillion.

The company designs semiconductor chips that are made of silicon slices that contain specific patterns. Just like you flip an electrical switch by turning on a light at home, these chips have billions of switches that process complex information simultaneously.

Today, they are integral to many AI functions—from OpenAI’s ChatGPT to image generation. Here’s how Nvidia stands up against companies that have achieved the trillion dollar milestone:

	Joined Club	Market Cap in trillions	Peak Market Cap in trillions
Apple	Aug 2018	$2.78	$2.94
Microsoft	Apr 2019	$2.47	$2.58
Aramco	Dec 2019	$2.06	$2.45
Alphabet	Jul 2020	$1.58	$1.98
Amazon	Apr 2020	$1.25	$1.88
Meta	Jun 2021	$0.68	$1.07
Tesla	Oct 2021	$0.63	$1.23
Nvidia	May 2023	$1.02	$1.02

Note: Market caps as of May 30th, 2023

After posting record sales, the company added $184 billion to its market value in one day. Only two other companies have exceeded this number: Amazon ($191 billion), and Apple ($191 billion).

As Nvidia’s market cap reaches new heights, many are wondering if its explosive growth will continue—or if the AI craze is merely temporary. There are cases to be made on both sides.

Bull Case Scenario

Big tech companies are racing to develop capabilities like OpenAI. These types of generative AI require vastly higher amounts of computing power, especially as they become more sophisticated.

Many tech giants, including Google and Microsoft use Nvidia chips to power their AI operations. Consider how Google plans to use generative AI in six products in the future. Each of these have over 2 billion users.

Nvidia has also launched new products days since its stratospheric rise, spanning from robotics to gaming. Leading the way is the A100, a powerful graphics processing unit (GPU) well-suited for machine learning. Additionally, it announced a new supercomputer platform that Google, Microsoft, and Meta are first in line for. Overall, 65,000 companies globally use the company’s chips for a wide range of functions.

Bear Case Scenario

While extreme investor optimism has launched Nvidia to record highs, how do some of its fundamental valuations stack up to other giants?

As the table below shows, its price to earnings (P/E) ratio is second-only to Amazon, at 214.4. This shows how much a shareholder pays compared to the earnings of a company. Here, the company’s share price is over 200 times its earnings on a per share basis.

	P/E Ratio	Net Profit Margin (Annual)
Apple	30.2	25.3%
Microsoft	36.1	36.7%
Aramco	13.5	26.4%
Alphabet	28.2	21.2%
Amazon	294.2	-0.5%
Meta	33.9	19.9%
Tesla	59.0	15.4%
Nvidia	214.4	16.19%

Consider how this looks for revenue of Nvidia compared to other big tech names:

$NVDA $963 billion market cap, 38x Revenue
$MSFT $2.5 trillion market cap, 12x Revenue$TSLA $612 billion market cap, 7.8x Revenue$AAPL $2.75 trillion market cap, 7.3x Revenue$GOOG $1.6 trillion market cap, 6.1x Revenue$META $672 billion market cap, 6x Revenue pic.twitter.com/VgkKAfiydx

— Martin Pelletier (@MPelletierCIO) May 29, 2023

For some, Nvidia’s valuation seems unrealistic even in spite of the prospects of AI. While Nvidia has $11 billion in projected revenue for the next quarter, it would still mean significantly higher multiples than its big tech peers. This suggests the company is overvalued at current prices.

Nvidia’s Growth: Will it Last?

This is not the first time Nvidia’s market cap has rocketed up.

During the crypto rally of 2021, its share price skyrocketed over 100% as demand for its GPUs increased. These specialist chips help mine cryptocurrency, and a jump in demand led to a shortage of chips at the time.

As cryptocurrencies lost their lustre, Nvidia’s share price sank over 46% the following year.

By comparison, AI advancements could have more transformative power. Big tech is rushing to partner with Nvidia, potentially reshaping everything from search to advertising.