Within 10 years, 50% of companies listed on the stock exchange will cease to exist

Technology, new financing models, and changes in corporate governance are reshaping the capital markets. If an investor were to go back to the early 1990s and look at the world’s largest companies, they would likely conclude that many of them would dominate the global economy for long periods. Almost none of them do so today.

For decades, investors and shareholders have based their strategies on a simple premise: large companies are enduring institutions. They weather crises, undergo leadership changes, and navigate economic cycles. Yet they endure.

This belief has shaped the way financial markets, regulators, and executives understand modern capitalism. Today, however, there are clear signs that this premise is outdated. A simple way to see this shift is to compare the companies that dominated the capital markets in the 1990s with those that lead today. 

In the United States, the top spots were once held by industrial and energy giants such as Exxon, General Electric, IBM, AT&T, and Walmart. Thirty years later, the landscape has changed dramatically. Today, the top spots belong to digital companies and technology platforms such as Apple, Microsoft, Nvidia, Amazon, and Alphabet.

This phenomenon is not entirely new. In the early 20th century, Joseph Schumpeter described capitalism as a continuous process of “creative destruction,” in which new technologies replace companies and industries once thought to be permanent. The difference is that this destruction is now accelerating and, perhaps for the first time, outpacing what most companies can absorb. Decades later, Clayton Christensen described a similar dynamic when discussing “disruptive innovation.”

This transformation is evident not only in the changing landscape of dominant companies but also in how long they remain at the top. Economic history shows that profound technological changes rarely preserve existing corporate structures. The digital revolution and artificial intelligence are not merely creating new companies; they are redefining the very concept of a company.

The reduction in the length of time companies remain listed on the stock exchange

Studies indicate that the length of time companies remain in the stock market is becoming increasingly shorter. Research by McKinsey and the consulting firm Innosight shows that the average tenure of companies in the S&P 500 index has fallen dramatically in recent decades. In the 1950s, a company remained in the index for an average of about 60 years. In the 1980s, that period dropped to about 30 years. In recent decades, it has approached 20 years, and projections suggest that this timeframe will fall to about 15 years. In other words, the speed at which companies enter and exit the group of the largest publicly traded companies has been increasing.

Analyses suggest that approximately half of the companies currently listed on the S&P 500 could be replaced over the course of this decade.

Of course, the replacement of companies in an index such as the S&P 500 does not necessarily mean that these companies have disappeared or left the stock market. Many continue to exist and operate as usual. Nevertheless, the rapid pace of this turnover reveals a structural shift in the stability of the companies that dominate the markets and in their relevance in the stock market.

This decline is occurring at the same time that the total number of listed companies is falling in several developed economies. In the United States, for example, the total has fallen from about 8,000 listed companies in the 1990s to just over 4,000 today. In Brazil, there were 600 listed companies in the early 1990s, and today there are 358.

The new logic of value creation.

The convergence of artificial intelligence and digital platforms is reshaping the competitive landscape of the economy and, consequently, of the stock markets. Digital companies are often able to grow at an unprecedented pace, with leaner structures and a strong ability to scale their business models globally.

Part of this shift stems from the nature of digital models. Software-based platforms scale with very low marginal costs, allowing a small number of companies to capture a large share of economic value. This form of digital platform capitalism tends toward monopoly, as it creates markets dominated by a few giants, such as Amazon, Alphabet, Apple, and Meta.

In the 20th century, growth meant hiring more people and building physical assets. In the 21st century, growth means automating processes and expanding the use of software and digital networks. Digital capitalism rewards network scale.

This transformation shifts economic value toward companies that control the software, algorithms, and digital infrastructure of the economy. For Greek economist Yanis Varoufakis, major digital platforms have come to function as true private economic territories on a continental scale, where companies and consumers operate without the burdens of traditional businesses, such as regional limitations, large workforces, massive supply chains, and heavy regulation. In the Greek economist’s view, companies listed today will be absorbed by or subordinated to the dominant digital platforms.

History, however, also shows that some companies manage to reinvent themselves in the face of technological change. Microsoft and IBM, for example, have weathered various technological cycles by adapting their business models, though not without undergoing profound structural changes.

Governance – The Corporate Paradox

This technological transformation is not limited to business models. It also puts pressure on the traditional governance structures of publicly traded companies.

Public companies operate within complex governance structures, featuring large boards, specialized committees, and increasingly sophisticated regulatory requirements. In many jurisdictions, they also face rising compliance costs, extensive reporting requirements, and greater exposure to shareholder activism.

These mechanisms are important for protecting investors and ensuring transparency. At the same time, they hinder companies’ ability to act quickly in highly competitive environments. Add to this the outdated composition of boards of directors, which often have too many members with widely varying professional backgrounds.

Privately held companies, by contrast, are able to make strategic decisions more quickly, and their managers are typically more familiar with the day-to-day operations of the business.

Here is the central paradox: Publicly traded companies are the best-funded in the economy, but they are also the slowest to change. Complex governance, hierarchical structures, regulation, compliance, and corporate culture make far-reaching transformations extremely difficult to implement. 

And in the age of artificial intelligence and rapid technological development, speed has become the primary economic asset.

The New Architecture of Corporate Finance

Technological transformation accounts for part of this stock market trend, but it is not the only factor. The way companies are financed is also changing.

Historically, the stock market served two key functions: financing expansion and providing liquidity to investors. Today, these functions are also beginning to emerge outside the stock exchanges.

The growth of private credit illustrates this shift. Estimates indicate that the global market already exceeds $1.5 trillion in assets, according to data compiled by Preqin and PitchBook.

Global asset managers such as Blackstone, Apollo, and Ares have begun managing large funds dedicated to direct corporate financing. The SoftBank Vision Fund, for example, has raised more than $100 billion to invest in late-stage technology companies.

Companies like Uber, Airbnb, and Palantir grew for years, funded by private capital, before turning to the public market. In 2013, Dell carried out one of the largest privatization deals in history to realign its strategy away from the pressures of the stock market.

In 2022, Company X, formerly Twitter, was acquired in a deal worth approximately $44 billion and was delisted from the stock exchange. Since then, it has operated as a private company. And since we’re talking about Elon Musk, an even more emblematic case illustrates just how far this transformation can go. SpaceX has become one of the world’s most valuable private companies, with valuations exceeding $150 billion, without ever having turned to the stock market. Funded by large private equity funds and institutional investors, the company demonstrates that highly capital-intensive industrial projects can be financed outside the stock markets—something unthinkable just a few years ago.

The cases above illustrate a significant trend: companies with a major economic and technological impact can continue to operate until they undergo a profound transformation, without being subject to the discipline and requirements of the public capital markets. 

The new era of a new capital 

“Ceasing to exist on the stock market” does not necessarily mean disappearing. It may simply mean shifting to other forms of financing. But in many cases, it will mean losing relative relevance in the stock market—or something even more drastic: economic irrelevance.

The transformation of publicly traded companies is the result of three converging forces: rapid technological advancement, increased complexity in the governance of listed companies, and the emergence of new forms of financing outside the public markets. One thing is certain: in 10 years, the landscape of publicly traded companies will be completely different.