World’s top tech companies compared on share price, earnings, and sales

An analysis of the world’s largest technology companies revealed that Nvidia has the highest price-to-earnings (P/E) and price-to-sales (P/S) ratios among the world’s top tech companies.

These companies — Apple, Microsoft, Nvidia, Tesla, Meta, Alphabet and Amazon — are affectionately known as the magnificent seven.

This group of tech giants outperformed the market in 2023 but has had mixed results in 2024 so far.

Nvidia, for example, has had an incredible start to the year on the back of the tremendous hype around artificial intelligence (AI).

Nvidia is a core player in the AI revolution because its chips are suited to processing data-heavy tasks with greater efficiency than conventional computer chips.

The company’s graphics cards, also known as graphics processing units, are ideal for machine learning, which drives generative AI services.

Nvidia’s share price increased by 71% in 2024 year-to-date. It has replaced Tesla as the favourite growth stock in the market.

The rapid share price growth is backed by strong revenue and earning growth. However, Nvidia still has very high P/E and P/S ratios.

The P/E ratio is calculated by dividing the market value price per share by the company’s earnings per share.

A high price-to-earnings ratio points to a potentially high stock price, depending on whether growth is high enough to justify the ratio. The inverse is also true.

The price-to-sales ratio (P/S) is calculated by taking a company’s market capitalisation and dividing it by the company’s revenue over the past 12 months.

A high P/S ratio typically means a share is expensive, depending on the company’s revenue growth. The inverse is also true.

It raises the question of how Apple, Microsoft, Nvidia, Tesla, Meta, Alphabet and Amazon compare on P/E and P/S.

The table below shows the P/E and P/S ratios for the magnificent seven.

Company P/E ratio P/S ratio
Nvidia 68.98 33.69
Amazon.com 61.46 3.26
Tesla 47.02 7.29
Microsoft 37.57 13.63
Meta Platforms (Facebook) 33.71 9.78
S&P 500 28.36 2.77
Apple 27.98 7.32
Alphabet (Google) 23.81 5.80

This article was first published by Daily Investor and is reproduced with permission.

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World’s top tech companies compared on share price, earnings, and sales