Total addressable market

Total addressable market (TAM) is the total revenue opportunity available to a company if it captured every customer who could realistically buy what it sells, across every market it competes in. It's a ceiling, not a forecast, no real company captures its entire TAM, but it sets the scale of what's possible before competition, cost, or execution take their share.

TAM matters most when judging how much room a company has left to grow. A business with a high share of a small TAM has less room to keep compounding revenue than a business with a smaller share of a much larger one, even if the second business's current numbers look less impressive today. Entering a new, related market expands a company's TAM, but a bigger addressable market on paper doesn't guarantee a bigger business, the company still has to win share inside it.