Blasé Capital sector shifts

The global landscape of industries, businesses, and sectors has shifted. According to a new McKinsey study, the top 10 list of the world’s most valuable firms has changed beyond imagination. When one compares the 2005 list with the 2025 one, there is one common firm, Microsoft, whose valuation has zoomed from below $300 billion to just under $4 trillion. The likes of names that were once influential in the last century, which include energy giants such as ExxonMobil, BP, and Shell, finance powerhouses like Citi, HSBC, and Bank of America, and consumer behemoths such as General Electric, Walmart, and Johnson & Johnson, have vanished. Among the new firms in the 2025 list are the tech superpowers such as Nvidia, Apple, Alphabet, and Meta. There are the new-age firms like TSMC, and Tesla. There is only one energy representative, Aramco. The world of business has transformed quite dramatically in 20 years.

In terms of market cap, the top 10 collectively accounted for less than $2.5 trillion. Today, the worth of the top 10 is just under $27 trillion, or more than 10 times the valuation. General Electric headed the 2005 list with a worth of $370 billion, which seems peanuts compared to the 2025 leader, Nvidia, with a valuation of more than $5 trillion. The tenth on the list, TSMC, with a worth of nearly $1.3 trillion, has a value that is more than three times that of General Electric. Aramco’s $1.65 trillion worth in 2025 is more than the combined value of ExxonMobil, Sheel, and BP in 2005. There is no comparison between the physical retailer, Walmart ($195 billion in 2005) with the e-commerce seller, Amazon ($2.7 trillion). Sadly, no finance giant, or a bank, features among the top 10 in 2025. Among manufacturers, only Apple, Tesla, and TSMC qualify in direct and indirect ways.

McKinsey’s study pinpoints 12 industries out of 57 it analysed, which “dramatically outpaced overall economic growth over the past two decades, as captured in the ‘change in industry’s share of the total market cap’ metric. They also saw competitors’ positions change dramatically within their industries, as captured in the ‘shuffle rate,’ measured as the cumulative market share shifts among companies.” When the two were plotted on a graph against each other (change in market cap on X axis, and shuffle rate on Y), the 12 sectors were on the extreme right of the graph. “Collectively, the 12 arenas nearly tripled their share of total market cap from 2005 to 2023,” states the study. Obviously, tech-driven categories such as cloud services, e-commerce, and consumer Internet saw the largest industry shifts. E-Commerce had possibly the largest growth for revenues, which jumped from $15 billion in 2005 to more than $1 trillion in 2023.

Shuffle rates capture the dynamism within a sector. Consider consumer electronics. Apple’s share of industry revenues grew from five per cent to 46 per cent. Even a newcomer like Xiaomi, which entered the market in 2010, captured six per cent of the market share. A summing up of the market gains in the sector gave a shuffle rate of 57 per cent. Compare this to the shuffle rates in aerospace and defence, which was 15 per cent. Obviously, in new sectors like electric vehicles and cloud services, the shuffle rate was 100 per cent. From the consumer electronics’ top 10 in 2005, three firms exited the list by 2023. Three firms came down the hierarchy, which include LG (1 to 3), Microsoft (3 to 7), and Sharp (5 to 8). Two maintained their standing: Samsung (2), and Sony (6). Two jumped: Apple (7 to 1), and Huawei (10 to 4). There were three new entrants in the 2023 list: Xiaomi (5), Shenzhen Transsion (9), and Lenovo (10).

Economic profit shifts were visible in the 12 happening sectors. “Between 2005 and 2023, (12) arenas increased their share of total global economic profit from nine per cent to 35 per cent…. Leading arenas by economic profit in 2023 were consumer Internet ($90 billion), consumer electronics ($76 billion), and semiconductors ($62 billion), which benefited from rising smartphone penetration, cloud computing adoption, and the growing use of microchips. Remarkably, in 2024, Nvidia alone reached $66 billion in economic profit, more than the entire semiconductor industry in our sample in 2023. In contrast, many non-arena industries, including non-banking financials, and telecom, experienced declining economic profits,” explains the report. As is obvious, the 12 arenas received an unduly high share of R&D investments. In 2020, the expenditure on research was 10 per cent of revenues, or double the figure for others. Newcomers, who accounted for 40 per cent of arena market cap, drove competition and innovation, and hiked dynamism.

Despite the entry of new players in the 12 top arenas, market caps were concentrated. In 2023, the top 10 in each arena accounted for 80 per cent of the total market cap, versus only about 60 per cent for the non-arenas. This implies that the top firms were valued exceptionally higher than the rest of the gang within sectors, despite the awareness that the sector was on the ascendant. Surprisingly, despite the seeming-monopolist tendencies vis-à-vis market cap, the 12 arenas witnessed competitive pressures, which forced the firms to continuously innovate due to fears of tech-related disruptions. Thus, there were winners and losers, which is evident from the newcomers.