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Illustration: Rebecca Zisser/Axios

What's worth more — a company that sells $250 billion of stuff every year at a profit margin of 22%, or a company that sells $200 billion of stuff every year at a profit margin of 3%?

The answer: It's surprisingly close. Both Apple and Amazon now have a stock-market valuation of $1 trillion. The Apple valuation makes a lot of sense: If anything, the iPhone maker is undervalued by the standards of the stock market as a whole. But Amazon is another story entirely: each dollar of profit it makes is valued by the market at an eye-popping $208.

The bottom line: It's almost impossible to justify a $1 trillion valuation if you're trying to get there the old-fashioned way, by looking at the present value of future cashflows. And it's certainly impossible to justify it by looking at Amazon's takeover value, since no one on earth is big enough to buy it.

What's next? The $1 trillion milestone is a real one, and now that Amazon has broken it, the sky's the limit for its stock, which Morgan Stanley sees rising another 25% to $2,500 per share. In today's winner-takes-all economy, big companies can grow faster than startups, and valuations are merely psychological obstacles on the road to ever-higher share prices. Never mind the cashflows, just look at all the wealth being created.

Go deeper

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus cases rose 10% in the week before Thanksgiving.
  2. Politics: Supreme Court backs religious groups on New York coronavirus restrictions.
  3. World: Expert says COVID vaccine likely won't be available in Africa until Q2 of 2021 — Europeans extend lockdowns.
  4. Economy: The winners and losers of the COVID holiday season.
  5. Education: National standardized tests delayed until 2022.
3 hours ago - Health

Standardized testing becomes another pandemic victim

Photo: Edmund D. Fountain for The Washington Post via Getty

National standardized reading and math tests have been pushed from next year to 2022, the National Center for Education Statistics (NCES) announced Wednesday.

Why it matters: There’s mounting national evidence that students are suffering major setbacks this year, with a surge in the number of failing grades.

3 hours ago - World

European countries extend lockdowns

A medical worker takes a COVID-19 throat swab sample at the Berlin-Brandenburg Airport. Photo by Maja Hitij via Getty

Recent spikes in COVID-19 infections across Europe have led authorities to extend restrictions ahead of the holiday season.

Why it matters: "Relaxing too fast and too much is a risk for a third wave after Christmas," said European Commission President Ursula von der Leyen.