OT - Question on TAM

I’ve heard a few statements where X company is already bigger than the estimated TAM from a market cap perspective. So question: Is TAM defined as market cap potential or TAM is defined as total revenue opportunity. Meaning, a $100 B TAM opportunity means that $100 B in revenue is at play versus the total market valuation. I would assume the former since EV/S multiple would cause the TAM potential to fluctuate.

TAM is max. achievable revenue if they capture 100 pct of the market. Statements that the market cap is already larger than the TAM are therefore pretty meaningless as software companies will trade at multiples of revenue (even a mature no growth company like Oracle trades at 6 times revenue)


TAM is almost always their revenue opportunity, unless specified in the company presentation. market cap is taking into account externalities like multiples, which can’t be rationally predicted. First google hit when searching for TAM: https://www.lightercapital.com/blog/what-is-total-addressabl…