The race to become the world’s first trillion dollar company is on.

Some commentators have predicted that the trillion dollar target could be reached before the end of 2018, with some forecasting that this could happen by October.

With two tech giants competing for the crown, who will be the first trillion dollar company? And what will this mean for business?

Who are the two front runners?

Apple and Amazon have emerged as the two publically traded companies most likely to reach a trillion. They are competing to become the first company to reach a trillion dollars in market capitalisation, which is the market value of a company’s outstanding shares.

Alphabet, the parent company of Google, and Microsoft are not far behind, but it looks like they won’t reach the target until closer to 2019 or 2020.

Technically, neither company will be the first to reach a trillion, with that title belonging to Chinese energy company PetroChina, which crossed the threshold on the Shanghai stock exchange (but not on Wall Street) back in 2007. This company is not considered to count, however as it is state-owned.

What Apple needs to do to become the first trillion dollar company

In terms of market value, Apple is the largest company in the world. The tech giant’s market cap is currently $945bn with shares up more than 13% this year and currently valued at $193. This means that Apple is just 7.1% away from the trillion-dollar mark and needs a 6% increase in stock price.

Reaching the target will likely be dependent on the success of annual sales of the iPhone 8 and the pricey iPhone X in the coming months. Growth in Apple’s services business is also needed to reach the trillion dollar mark.

Apple’s sales increased 16% in the first three months of 2018, boosted by expansion into Chinese and Indian markets, despite reports of the first global decline in smartphone sales this year. The company is due to announce its third quarter results for 2018 on July 31, which should give some indication of how close the company is to reaching a trillion.

What Amazon needs to do to become the first trillion dollar company

The other major contender is Amazon. The company’s market cap is around $880bn, 11.8% away from a trillion, and being nearly $150 behind Apple makes it look as though Jeff Bezos may miss out on becoming the first CEO of a trillion dollar business. However, Amazon stocks are up 58% this year thanks in part to Amazon’s recent Prime Day, the company’s annual retail holiday, in which shoppers spent $4.2bn.

Amazon already has the richest CEO of all time, with Jeff Bezos worth a staggering $150.3bn, the first person to reach a net worth over $100bn.

Some commentators are therefore forecasting that Amazon could in fact overtake Apple if stocks continue to perform how the have been the past few months and increase at a faster rate than Apple. Amazon’s quarterly report is also due next week, and will provide an insight into whether the company, particularly its cloud subsidiary Amazon Web Services, has had a successful enough quarter to keep it in the running.

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However, for the founder of global advisory firm Harbour Capital Partners Daniel Wachtel, a recent investment from business magnate Warren Buffett could tip the balance firmly in Apple’s favour:

“Google just had a great quarter, Amazon has been doing very well, but thanks to an investment by Warren Buffett I believe that Apple will be the first barring a bad product presentation or launch and they beat the analyst’s estimates. The summer is quiet for the company, but with the following of Buffett followers and the fandom that he and the brand have it is likely to happen first. It could happen sooner than later if Buffett ups his shares or they knock the cover off the ball in the fall.”

What does having A trillion dollar company mean?

But can a company get too big? For some, anti-competitive behaviour and the vast amounts of data these companies amass is a cause for concern. Alphabet is currently under investigation by the European Union over antitrust practices after the company was accused of giving preferential treatment to its own shopping services.

However, Wachtel believes that trillion dollar companies are now inevitable:

“We knew a company would eventually hit the trillion mark with companies having billion dollar earnings on the regular and thanks to inflation, globalisation, the wonderful marketing campaigns, and the large margins due to the items being made at low cost it is only be matter of time before it happens.”

Does it matter?

Overall, it is unlikely that becoming a trillion dollar company will have a fundamental impact on the everyday running of either business. In that sense the milestone is largely symbolic. Although psychologically it may provide a confidence boost for the company and its investors, with the second trillion dollar company likely to be hot on its heels, the novelty may be short-lived.

For either company, product and technology development is unlikely to be greatly altered, and the chances of reaching a trillion drastically changing the market as a whole looks unlikely.

Managing partner and co-founder of private equity firm Esperance Private Equity Robin Lee Allen said:

“For a time this will be a very prestigious event for whatever company reaches the milestone first. In the long run it won’t mean very much at all. Who remembers what the first billion-dollar company was?”

This view is shared by principal of the FedPolicy Investment Research Group Robert Johnson, who believes that the event will not have much long-term significance:

“There will be a great deal of fanfare when the trillion dollar barrier is breached.  But, much like the Dow breaking through various round number barriers – 20,000 or 25,000,it really is no major event and will not have a significant impact on the markets.  You will certainly see a plethora of stories about this and will see many talking about Jeff Bezos’ personal wealth, but it overall will be an insignificant event.”

Perhaps the biggest impact of the trillion dollar milestone is what this says about the rise of big tech when compared with traditional industry. With six of the ten richest people in the world all owners of tech companies, Sillicon Valley’s influence is undeniable. In fact, the US tech industry has already reached a trillion, with the 10 largest tech companies expected to generate aggregate sales of more than $1tn this year for the first time.

Regardless of the recent backlash received by the likes of Facebook and Google, technology is undoubtedly creating wealth and impacting the global economy on an unprecedented scale, be that positively or negatively.