Let’s begin by understanding that most of the future $10 trillion companies are those that already have the highest valuations. Even the youngest among these companies have existed for 20 years. The point is that companies valued in the hundreds of billions and trillions take a long time to build: They, therefore, have the best chance of reaching the unthinkable $10 trillion mark first.
To provide further context, no firm is currently valued at $5 trillion. Expectations are that the threshold will be reached in 2028. It seems that it could take decades for a company to reach a valuation twice that level. In truth, it could be a company that bursts onto the scene from relative obscurity. Some now-unknown AI companies could certainly fit the mold. But no one knows.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) stock is the second highest-valued equity globally, at $2.35 trillion. It was actually worth $230 billion more at the height of the pandemic tech bubble before losing ground as rate hikes did their work. It’s another one of the future $10 trillion companies. One thing that is noteworthy about Microsoft’s market cap is just how rapidly it has grown of late. Just before the onset of the pandemic, the total value of all outstanding MSFT stock was approximately $1.3 trillion. So it has gained about $1 trillion in value since.
That is primarily attributable to the fact that the pandemic put tech on steroids. Money was flowing into these companies at an extraordinary pace that no one could have anticipated. While the pandemic was a massive disaster, it was a boon for tech as everyone was forced inside. Companies like Microsoft were gifted accelerated sales and quantities of data that they couldn’t have otherwise. That acceleration of everything explains how Microsoft has grown so quickly. And now it has AI setting it up for its next growth phase.
Alphabet (GOOG,GOOGL)
The story of Alphabet’s (NASDAQ:GOOG,GOOGL) stock and its valuation follows a very similar arc to Microsoft’s. The same overarching catalysts apply to Alphabet and the benefits are similar too. Both companies have become much stronger as a result of the pandemic. It’s another one of the future $10 trillion companies. The difference is basically scale. Alphabet gained roughly $500 billion in value and is now valued near $1.6 trillion. The company has suffered in different ways over the past year. Mainly, Google has seen a massive slide as search revenues have declined on persistent economic fears. Companies are spending less on advertising.
Yet it’s very much worth noting that Google must have collected a massively higher amount of data throughout the pandemic due to the search spike. That will be a huge tailwind for a long time to come. Consider also that the company recently released its AI offerings. It is just getting started on its march to $5 trillion and AI could conceivably accelerate that goal much like the pandemic accelerated Alphabet recently.
Apple (AAPL)
Apple (NASDAQ:AAPL) is expected to be the first stock to reach $5 trillion in value. It briefly touched the $3 trillion mark at the apex of the tech boom during the pandemic and was the first to reach that threshold. Now it is worth around $2.75 trillion, roughly doubling since the beginning of the pandemic. Again, the same story: People stuck at home in front of screens was a shot in the arm for Apple.
Current expectations are that Apple will again double in value by 2028 when it is anticipated to cross $5 trillion. Apple reach $1 trillion in 2018 by the way. So if those predictions are accurate it will have multiplied by 10X in value over 10 years. Not too bad. Down the road, it could be one of the future $10 trillion companies.
We know that Apple relies on iPhone sales for the majority of its revenues. Those sales remained somewhat threatened by an economic slowdown in the short term. But Apple’s long-rumored iCar, or Project Titan, could accelerate its growth beyond current expectations.
Meta Platforms (META)
Some of the shine may have rubbed off of Meta Platforms (NASDAQ:META) stock over the pandemic, sure. The Metaverse-focused rebrand has not been a success. In fact, it seems pretty crazy in hindsight. How could a company with access to resources and some of the brightest minds there are, have missed the mark so badly?
I don’t have the answer but I’m still astounded that as inflation rapidly increased to historic levels during the summer of 2021 that the Meta rebrand plowed forward.
Surely the company has a team of economic advisors watching the market as it relates to its prospects. Surely, too, they could see rate hikes coming. That would have meant speculative growth businesses like the metaverse would dry up as credit tightened and speculative lending slowed. Anyway, I digress. It happened and Meta Platforms fell much faster than the other tech giants as a result. Yet, it remains an advertising giant that reached $1 trillion in the pandemic. It can certainly rebound and become better than it ever was.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is the gaming and computer graphics giant that seems to be unstoppable. NVDA stock has been going through a growth spurt since 2016 that is matched by few firms ever. It has only had two down years during that span and has more than doubled in five of six of those positive years. During the sole year it didn’t double, it appreciated by 77%.
Nvidia has become one of the clearest companies benefiting from the emergence of AI. Now that AI has become available through OpenAI and Google there’s been an upsurge in interest. The markets realize how great the opportunity is.
Nvidia has been dominating the AI chip market for several years. So it makes sense then that investor capital is again flowing into NVDA shares. The cynic will say that Nvidia’s AI opportunity simply leads to better graphics. The reality is much greater and Nvidia has pricing power on its side.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) remains the largest eCommerce and retail stock by a wide margin. At $1.2 trillion, it’s worth more than double the next retailer, LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY).
It’s also the 5th most valuable company globally which is why it’s likely to someday reach $10 trillion. Yet, the E-commerce world is much bigger than the U.S. market Amazon dominates with 40% of the market. Annual online sales in the U.S. are valued at $843 billion annually. In China, the world’s largest eCommerce market, that number stands at $2.78 trillion annually.
The greater differentiator is that in China eCommerce accounts for 52% of retail sales. In the U.S. that number is 19%. That suggests that for Amazon to continue to grow it has to increase digital penetration. That and expand internationally. There’s no reason to believe it’s impossible and Amazon is far more valuable than Alibaba (NYSE:BABA) which is the largest Chinese eCommerce firm.
Tesla (TSLA)
Tesla’s (NASDAQ:TSLA) stock has some really amazing growth history backing its shares. Since going public in 2010 it suffered its first down year in 2022. It is up in 2023. 2020 saw its value increase by nearly 800%. In 2013 it increased by nearly 400%. It has ballooned from $2.5 billion in value to $570 billion in that period. That’s 235X growth. It’ll need to roughly 20X if it’s ever to reach $10 trillion.
Current estimates as to when Tesla could cross the $5 trillion mark vary wildly. One expects that could realistically happen in 2066 while Cathie Wood predicted Tesla will be there 40 years earlier, in 2026. The truth is more likely somewhere in between. Wood is a known tech bull who has been very incorrect recently in judging the market’s direction. Tesla has already eclipsed the $1 trillion mark back in 2021 when shares peaked above $400. If Tesla can ramp up volume production and gain significant market share in the near future, $2 trillion might not be that far away.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
