Are private companies worth more than the entire Canadian economy? Some people seem to think so. Every once in a while, a superstar company, usually in the technology sector, reaches record valuations, triggering comparisons with the country’s GDP.
For example, NVIDIA’s market capitalization exceeded Canada’s GDP in 2025. By May 2026, the value of chip designers exceeded the annual GDP of every country except the United States and China.
The reason this comparison doesn’t tell us much more than an emotional response is because the two numbers are measured in different units and cannot be compared.
Physicists love to discuss units of measurement. You cannot compare the outside temperature on a given day to the temperature rise between different days. When economists investigate similar dynamics, they typically focus on the distinction between stocks and flows.
Textbooks often talk about faucets and bathtubs to explain the difference. Stock is the amount measured at a given moment, like water in a bath. Flow rate is the amount of water measured at regular intervals, such as the amount of water from a tap in liters per minute. The two are related because flows fill and drain inventory, but they are not directly comparable because they have different units.
In our scenario, market capitalization is equity. NVIDIA’s approximately $5 trillion as of mid-June 2026 is the present value of every dollar of profit the company expects to earn before it ceases trading.
But GDP is a flow. Canada’s nominal GDP in 2025 was approximately CAD 3.25 trillion (approximately USD 2.4 trillion), which is the value of all final goods and services produced by the country in one year. Comparing these two numbers is like comparing the owner’s income to the home’s net worth.
So what if you want to get some information out of these numbers? The best way to do so is to compare apples-to-apples. In our context, this means imagining what would happen if all of Canada’s economic activity were packaged into a company called Canada Inc., and that company went public and offered for sale to investors, just like an IPO.
This IPO will leverage the expected future profits to give Canada Inc. a single figure today. Therefore, to determine whether a company is worth more than Canada, we need to ask what Canada would list for.
A standard tool is the Gordon Growth Model, which is used to value a company’s stock based on its dividend. If we discount a flow that increases at a constant rate by a constant rate, the present value is next year’s flow divided by the difference between the two.
Flotation value = next year’s output / (discount rate − growth rate)
The apparent discount rate is the long-term Canadian government yield, approximately 3.8 per cent as of June 2026. However, Olivier Blanchard has shown that safe interest rates tend to be below the growth rate of developed economies, and that the economy as a whole cannot be rationally discounted at interest rates that low. So we’re going to price the economy’s output in stocks at a rate that carries a risk premium over government bonds. (This is the additional yield (or return) the investment provides compared to UK government bonds, compensating the investor for taking on additional default or market risk). We have adopted a range of 5% to 8% to give us room to experiment with different valuations as the Canadian stock market moves. The results are summarized in the table below.
discount
rate
discount rate
negative growth floating value,
CAD flotation value,
Multiple of US dollar
GDP for 1 year
5%
1.5% 224 trillion 161 trillion
69 times
6%
2.5% 135 trillion 97 trillion
41 times
7%
3.5% 96 trillion 69 trillion
30 times
8% 4.5% 75 trillion 54 trillion
23 times
Even with the harsh 8% discount rate, which estimates Canadian production to be riskier than most corporate stocks, Canada would still be listed at 23 times annual production, or 41 times the more moderate 6% (C$159 trillion, or US$112). NVIDIA is one of the most valuable companies in history, valued at approximately $5 trillion. On a stock-to-stock basis, a company is no bigger than a country.
One criticism of this back-of-the-napkin calculation is that valuations are usually based on profits rather than revenues, and GDP is closer to revenues, a country’s total production before paying wages, settling supplier bills, and replacing worn-out capital.
If accountants and financial experts were involved in a genuine Canada Inc. IPO, they would likely be interested in leveraging the residuals that the owners could actually bank, which would likely result in a lower number in the end. But even a smaller number would amount to at least tens of trillions.
In other words, there is no private company on earth worth more than the net present value of the Canadian economy. But the real lesson is to stop comparing stocks and flows.
