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By Theo Francis

Nvidia is No. 1 in the annual Management Top 250, in a year when the tech industry's overall dominance continued to slip in the ranking of America's best-run companies.

With innovation and financial strength driving shifts in the upper reaches of the ranking, five of the so-called Magnificent Seven tech firms landed in the very top spots: Nvidia took the lead from Apple, which replaced it at No. 2. Microsoft kept the third spot, and Alphabet returned to fourth, after slipping to eighth last year. Amazon.com — officially a retailer despite its heavy tech emphasis — ranks fifth, up from No. 19 last year.

The biggest and most successful tech companies have capitalized best on shifts in technology and hiring, while others in the industry have fallen in the rankings — leaving room for companies in other industries to rise — says Daniel Martin, chief data scientist for Claremont Graduate University's Drucker Institute, which compiled the ranking for The Wall Street Journal.

A tumultuous year

The Management Top 250 ranking uses the principles of management guru Peter Drucker to identify the most effectively managed businesses. This year, 668 companies were graded on customer satisfaction, innovation, social responsibility, employee engagement and development, and financial strength, using 34 indicators supplied by third-party data providers. The Drucker Institute created the statistical model behind the ranking.

The ranking reflects the year ended in June — a period of tumult and often countervailing forces that started before President Trump's second term and ended after his sweeping tariff policies began. Profits generally rose despite trade and economic uncertainty, and consumer spending largely held up amid persistent dissatisfaction with prices. But employees grew gloomier as a cooling labor market gave employers the upper hand.

There are some signs of stress in the ranking. A total of 66 companies in the Top 250 received red flags for scoring in the bottom 25% of the full 668 companies in at least one of the main ranking components — most commonly financial strength and employee engagement. Only utility holding company Sempra received two red flags, in financial strength and customer satisfaction.

Sempra said customer satisfaction for utilities can be affected by cost concerns, including those driven by state mandates, which make up more than a third of the average bill in California, one of its primary markets. It added that the measures underlying the financial-strength scoring don't reflect utility-company performance well, and that performance improved excluding such factors as unusual tax effects and currency fluctuation.

For the first time since The Wall Street Journal first published the ranking in 2017, no company qualified as an "all-star" — a designation for any company that scores in the top 15% of each of the ranking's five main components. Only Apple made the grade last year.

Tech slips

After the top five, tech companies became scarcer. Only three more tech firms made the top 20, for a total of eight in that group, counting Amazon.com — down from 11 last year. Two tech companies that were in the top 10 last year fell out of the top 20 this year: Intel dropped to No. 25 from fourth place last year, with declines in all five main categories of the ranking. Adobe fell to no. 28 from ninth, with big declines in scores for innovation and social responsibility.

Intel named Lip-Bu Tan as its new chief executive in March, and the executive has headed a turnaround effort that this fall ended the company's six-quarter streak of losses. The company has also benefited from infusions of capital announced by the U.S. government in August and Nvidia in September.

Among the non-tech companies rising sharply were heavy-equipment maker Caterpillar, which rose to 10th from No. 29 last year, and Honeywell, the industrial conglomerate, which shot up to No. 15 from No. 78.

The other non-tech companies in the top 10 are Mastercard at No. 6, Procter & Gamble at No. 7, International Business Machines at No. 8 and Johnson & Johnson at No. 9.

Just two of the Magnificent Seven failed to approach the top of the charts. Meta Platforms dropped to No. 66, from No. 46 last year, with a red flag for customer satisfaction. And Tesla fell off this year's list altogether, after ranking 199th a year ago. (Stock-market performance for the seven companies has been similarly spotty — only three had outperformed the broader stock market late into 2025, and just two had as of Dec. 5.

Trading places

At the very top of the ranking, the two most valuable companies in the world swapped places — barely. Their overall scores are within a few hundredths of a percentage point of each other.

Apple has long ranked in the top three, and was No. 1 last year. Nvidia reached no. 2 during a half-decade climb. Overall, scores for both companies slipped this year, but Apple's fell farther.

The biggest factor in Apple's stumble was a decline in its social-responsibility score, caused by "significant drops" in metrics related to the company's global supply chain, Drucker's Martin says. Underlying factors include labor conditions, concentration of production in higher-risk regions and availability of complete supplier audits.

It was enough to push Apple down to No. 190 in social responsibility; Nvidia is No. 31.

"It's not so much what it's doing internally as a company, as how its supply chain has changed," Martin says of Apple. Like many other companies, Apple was forced to revamp its supply chain in April after President Trump announced sweeping new tariffs on nearly every country in the world. The company routed more of its iPhones to India for final assembly, accelerating a trend already under way. Meanwhile, many of the materials used in modern electronics are mined in war-torn regions such as the Democratic Republic of Congo, where child and forced labor have been documented.

In a 2025 supply-chain progress report published on its website, Apple said it works to align its practices with United Nations sustainable-development goals. Earlier this year, Apple said it was nearly at a year-end goal to use only recycled rare earth elements in magnets and cobalt in batteries. The company also said it continues to strengthen industrywide supply-chain due diligence, and last year told suppliers to stop obtaining tin, tungsten, tantalum and gold from Congo and neighboring Rwanda.

Apple's highest component scores in the ranking are in financial strength, where it is second among the Top 250, and innovation, where it ranks third. Nvidia is No. 1 in both financial strength and employee engagement and development.

Nvidia's skyrocketing share price in recent years has contributed to its draw as an employer, along with a culture that often puts even junior employees on important projects.

New priorities

The decline in Apple's social-responsibility score reflected a broad trend. More than half the companies in the ranking saw declines in that score, while a similar number had declines in financial strength — and a third of the Top 250 saw declines in both categories.

The widespread decline in social-responsibility scores suggests a broad reordering of business priorities. "We're seeing companies adopt a much more short-term, financially focused mindset," Martin says. "The standard for what is considered a good [social-responsibility] investment is dropping, likely due to market pressures that are really incentivizing more fiscally conservative behavior from companies."

Meanwhile, scores for financial strength and employee engagement largely moved together, Martin says. In most cases, financial strength suffered at companies whose scores for employee engagement and development declined.

Cause and effect aren't always clear, but there are a couple of ways the metrics could be linked. Financially stressed companies may curtail efforts to keep employees happy. Or investing too little in employees may alienate workers enough that it increases turnover or dents productivity, ultimately hurting a company financially.

However, the top 25 companies show a different pattern. They generally fared well on financial strength even when their employee-engagement scores slipped.

One possible explanation: The best-performing companies are spending more heavily than others on innovation, and the advantage that gives them financially is more than enough to offset any negative impact from declining employee engagement.

Innovation pays

Innovation drove many of the gains at companies that rose in the ranking, followed by customer satisfaction and financial strength.

That includes three companies that leapt into the top 10 this year. Amazon climbed to No. 5 with improvements in innovation and financial strength, despite slipping employee engagement. IBM at No. 8 and Caterpillar at No. 10 both were propelled by improvements in innovation.

Amazon has been plowing billions of dollars into data centers and other capital investment, and this fall the company released a new custom chip for the AI market. At the same time, it is ramping up its use of robots and automation in warehouses to more than a million in service this summer, and Amazon Chief Executive Andy Jassy has said AI will lead the company to cut jobs. "It's hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce," Jassy told employees in June.

In a note to company employees in late October, Amazon executive Beth Galetti, who oversees human resources, said the company is already seeing results from yearlong efforts to operate more like a huge startup. The 14,000 job cuts announced this fall, she added, "are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we're investing in our biggest bets and what matters most to our customers' current and future needs." Three companies jumped more than 120 places in the ranking. Virginia-based electric utility company AES rose to No. 76, from No. 212 last year, on a strong gain in innovation as well as increases in scores for social responsibility and customer satisfaction. In July last year, AES unveiled a robot designed to help crews install solar panels faster and more cheaply.

GE HealthCare Technologies, spun off from General Electric in early 2023, rose 125 spots to No. 122 on strength in employee engagement and social responsibility, as well as innovation, despite dropping sharply in financial strength and customer satisfaction. The company said it has launched more than 40 products this year and has mitigated more than half its 2025 tariff exposure. It has touted new multiyear arrangements with customers like one announced in January with California's Sutter Health encompassing AI-assisted imaging, outpatient cardiology and maternal care, and more.

Expedia Group, the online travel platform, gained 122 spots, to No. 125, on strong gains in financial strength and innovation, despite slipping significantly on customer satisfaction.

About 50 companies made this year's list after failing to make the cut a year ago — including Air Products & Chemicals, which landed at No. 35 with a strong showing for customer satisfaction. It last appeared in 2023 at No. 111.

Companies falling the most in the ranking often did so with substantial drops in customer-satisfaction scores. Among them: Allstate, which fell 105 places to No. 188, with an accompanying sharp drop in its rankings on customer service and innovation.

Starbucks fell to no. 187 from No. 86, losing ground in every category, in particular employee engagement. Amid a six-quarter stretch of same-store sales declines, CEO Brian Niccol is pushing a tightly scripted charm offensive to woo customers, as well as closing stores and cutting corporate jobs. Meanwhile, unionized baristas in some areas have staged walkouts.

Starbucks has said nearly all locations remain open and that its yearlong turnaround effort to revamp stores has led to customers visiting more and staying longer, and to better financial results. It has also called its jobs the best available in retail, with employee surveys showing growing majorities of employees calling the company a great place to work.

"The 'Back to Starbucks' plan is working, and our turnaround is taking hold," a spokeswoman said in a statement.

Theo Francis is a Wall Street Journal staff reporter based in Washington, D.C. Email him at theo.francis@wsj.com.