Stock market spotlight: These firms are propelling the growth of this significant index
In these financially murky times, the size of a company isn't the only metric that matters. A lesser-known key performance indicator is gaining traction, and its significance is evident in the current market landscape.
A recent analysis of listed companies has yielded some surprising findings. While Germany's big three automakers—Volkswagen, Mercedes, and BMW—struggled in the first quarter and are contending with extensive job cuts, the Italian sports car manufacturer Ferrari is experiencing one success after another. This week, their CEO Benedetto Vigna announced a 17% increase in group profits, even with recent declining sales figures from China. Ferrari is holding firm to its 2025 forecast and plans to launch its first electric Ferrari next year. The stock market is taking notice, as Ferrari has long surpassed the German mass producers in market capitalization. Ferrari serves as a shining example of what matters in uncertain economic times and in the face of AI breakthroughs: It's the efficient deployment of human resources that counts, not simply the size of a company.
Using a comparison platform, the world's 235 largest listed companies were ranked by profit per employee, revealing some intriguing results. Topping the global rankings is US chipmaker Nvidia, with a profit of $2.02 million per employee. Despite having only 36,000 employees, Nvidia benefits from the immense global demand for AI chips, resulting in a 2024 net income of nearly $73 billion. For comparison, Meta Platforms' profit per employee is $841,900, Apple's is $571,600, and Microsoft's, with a workforce many times larger than Nvidia's, is around $386,600.
A similar pattern can be seen with the number two on the list, Altria. The US conglomerate behind brands like Marlboro has recently generated around $1.81 million per employee in profit. However, the rules here aren't black and white. US oil producer Saudi Aramco, with 75,000 employees, achieved $1.61 million in profit per employee, placing it third.
Interestingly, US companies still dominate in terms of productivity, with 80% of the top 20 companies on the comparison list headquartered in the US. Technology and energy companies, such as AppLovin, ConocoPhillips, and Arista Networks, as well as large US financial institutions like Visa, Blackstone, and KKR, also feature prominently on the list.
Some Chinese companies hold their own in this productivity comparison. PDD Holding, behind Pinduoduo, ranks seventh with around $885,000 per employee, closely followed by CNOOC with $843,000 per employee.
European corporations seem to struggle significantly with employee efficiency. The European leader, Swedish Investor AB, barely makes it to 18th place with around 547,000 dollars per employee. Car manufacturer Ferrari ranks 33rd with 291,000 dollars per head, while French luxury conglomerate Hermès comes in at 53rd with 190,000 dollars per capita. German corporations lag even further behind, with Munich Re performing best at 136,000 dollars per employee, landing them at 78th place globally.
However, it's essential to acknowledge that such figures can be misleading. For research-driven pharma or biotech companies, high research and development expenses are part of the business model to continuously develop new drug candidates for their pipeline, potentially becoming significant revenue and profit drivers in the future.
For investors, such a comparison can still be insightful in assessing a company's current situation and prospects, especially in an era of increasing automation through AI. The number of employees a company has is less important to the stock market than the value they generate.
In summary, US corporations typically show higher profit per employee ratios compared to many European corporations due to factors such as a more flexible labor market, higher wage levels in the US tech sector, greater emphasis on innovation, and sometimes lower corporate tax burdens. European corporations often face stricter labor regulations and higher social contributions, which can impact net profitability per employee.
- What is surprising is that while German automakers are facing struggles and job cuts, Ferrari, an Italian sports car manufacturer, is thriving, with a 17% increase in group profits.
- Ferrari is making headlines in the stock market, surpassing the German mass producers in market capitalization, and serving as a testament to the importance of productivity in uncertain economic times.
- Nvidia, a US chipmaker, tops the global ranking of listed companies when ranked by profit per employee, with $2.02 million per employee, thanks to the immense global demand for AI chips.
- Despite lagging behind in terms of employee efficiency, European corporations can still be valuable investments, especially in an era of increasing automation through AI, as the stock market values the value a company generates, not just its employee count.
- For investors who are interested in efficiency and profitability, it might be worth examining companies like PDD Holding from China, ranking seventh globally, and US companies like Nvidia or Altria, which are leading in terms of productivity.
