Driven by strong capital markets in 2023, the average annual total shareholder return (TSR) of companies in the Value Creators database rose significantly. From 2019 to 2023, the median TSR increased from 7% per year (2018 to 2022) to 12% per year.

Technology and tech-related companies led the way, with enthusiasm for generative AI fueling a rebound from losses in 2022. However, the landscape was not entirely dominated by technology. Compared to last year’s study, several asset-intensive industrial sectors or previously underperforming industries also accelerated their TSR performance and now rank among the top in our industry rankings. With global market indices hitting all-time highs, companies across sectors now face the challenge of maintaining or regaining TSR momentum.

TSR Accelerated for Many Industries

Technology hardware emerged as the standout industry for value creation, boasting a median TSR of 27% per year from 2019 through 2023. (See Exhibit 1.) Value creation was especially impressive among mega-cap companies and semiconductor manufacturers. The software and electrical components industries also maintained their strong TSR trajectory, ranking 5th and 9th, respectively, among the 35 industries.

Not surprisingly, technology and tech-related companies also continue to dominate our large-cap value creators ranking, covering the 200 most valuable companies worldwide. Within this elite group, tech hardware companies secure five of the top ten spots and nine of the top 20. The prominent names include NVIDIA, the top performer, and Apple, boasting a $3 trillion market cap at the end of 2023. Software players, such as ServiceNow and Shopify, also make the list, alongside electric-vehicle giants Tesla and BYD and retail powerhouses PDD and Mercado Libre.

Although high-flying technology companies grab the headlines, our 2024 rankings highlight two other sets of industries that also achieved TSR gains substantially above the market average of 5% compared with last year’s rankings. 

The second group comprises industries that had faced TSR headwinds from 2018 through 2022 but enjoyed strong recoveries in 2023. These include industries that rely on significant consumer spending: automotives (OEMs and component suppliers), consumer durables, and travel and tourism. Investors were apprehensive about such companies during the pandemic years but appear to have regained a degree of confidence based on stronger than expected consumer spending in 2023.

In contrast, several health care sectors—large-cap pharma, medical technology, and health care services—experienced a TSR slowdown, even though their median returns continued to surpass 10% annually. During the pandemic, some companies in these sectors saw profits surge, demonstrating their ability to deliver extraordinary returns thanks to innovative treatments. Now, with a more stable health care landscape, investors appear to be recalibrating their expectations for the long-term prospects of these competitive sectors.

The large number of leading firms in technology and other highly ranked industries, as well as more favorable macroeconomic conditions, has allowed North American companies to expand their representation in the global value creators rankings. These firms occupy 38 spots among the top 100 value creators, up from 27 in the 2023 rankings. They also now hold 41% of the top ten positions in their respective industries, rising from 38% in 2023. Asia-Pacific companies continue to claim an outsized share, with 51 spots among the top 100 and 39% of the top ten by industry. Conversely, European companies remain underrepresented among the top performers. Despite making up 20% of the overall sample, they secured only 9 of the 100 leading spots and 13% of the top ten positions across industries.

The Playbook Going Forward

Looking ahead, many companies will find it difficult to exceed the bullish expectations reflected in today’s buoyant market. To maintain investor confidence and TSR momentum, each company must establish a clear path to growing its business profitably. This will often require investing in innovation, such as artificial intelligence and sustainability, to open disruptive new avenues for value creation.

Faced with high expectations and the ever-present risk of a market correction, companies in high-flying sectors need to focus on the factors within their control, such as ensuring cost efficiency and investing to foster long-term growth and support their current valuation. In many cases, real innovations will be essential to allow these companies to navigate market fluctuations and maintain investors’ enthusiasm over the long haul.

Companies that have not been riding the recent market tailwinds have greater upside opportunities. They need to gain investor confidence by devising compelling value creation plans and clearly communicating their strategies.