When someone says a company is a Fortune 500 company, people know it’s a large company. But what does that mean exactly? I decided to find out. Apple is the most valuable public US company and has a market cap (i.e., valuation) of $2.42 trillion as of today, so I assumed it would be ranked first on the Fortune 500 list. To my surprise, it was third. Walmart was ranked first and Amazon second. See the complete Fortune 500 list for 2022 list here.

I looked up Fortune’s methodology and learned that it uses total revenue to determine the rankings. Not market cap (i.e., valuation) or profitability. Just top-line revenue. It ranks on how many dollars customers gave a company (revenue) in a year, not how many of those dollars the company kept (profit) or what the market says the company is worth (market cap). Here’s the top three Fortune 500 companies (with 2022 revenue for context):

• Walmart – $573 billion
• Amazon – $514 billion
• Apple – $394 billion

Conversely, the S&P 500 is an index of the largest publicly traded companies listed in the United States. The S&P 500 doesn’t rank companies directly. Instead, each company makes up a certain percentage of the overall index, which is called its index weight. The weight calculation isn’t as simple as Fortune’s revenue methodology, but it is mostly based on market cap. The larger a company’s market cap, the more weight that company carries in the index. Full weighting methodology here.

Here are the companies with the biggest index weights (with market cap as of today for context):

• Apple Inc. – $2.42 trillion
• Microsoft Corp. – $1.89 trillion
• Alphabet Inc. – $1.21 trillion
• Amazon.com Inc. – $962 billion
• Berkshire Hathaway – $684 billion
• Nvidia Corp. – $597 billion
• Tesla, Inc. – $570 billion
• Exxon Mobil Corp. – $447 billion
• UnitedHealth Group Inc. – $439 billion

Interestingly, Walmart is an S&P 500 company, but it has a lower weight in the index than the above-listed companies. It has a market cap of $372 billion as of today.

Interesting to see how Fortune and S&P 500 both seek to identify the largest companies, but their rankings differ because they’re measuring different things.

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