A trillion-dollar valuation by a single company was once unthinkable even just a few years ago. After all, the S&P 500 was created in 1957 when the total market capitalization of the index was $172 billion. Today, 41 of the stocks comprising the index have a valuation greater than that.
Now there are six stocks worth over $1 trillion. Apple (NASDAQ:AAPL) is worth $2.8 trillion itself, some 16 times more than the entire S&P 500 was worth nearly 70 years ago. It could lose more than half its valuation and still be worth more than $1 trillion!
Because companies continue to innovate, acquire, and grow, it’s natural and expected that we will see even more companies hit 13-figure valuations in the future. Over the next decade or so, the following three companies will become the next trillion-dollar stocks.
Visa (V)
Top payment processor Visa (NYSE:V) is already almost halfway to the finish line at $488 billion. It will only require 6% compounded annual growth for it to cross over the threshold.
Wall Street forecasts that Visa will grow earnings 15% annually for the next five years, slightly less than the 20% annual growth it saw over the last five years. Yet it stands a greater chance of growing earnings faster than the forecast. Visa currently processes 86% more payments volume than nearest rival Mastercard (NYSE:MA), $10.9 trillion worth as of the end of 2021.
A bet on Visa becoming a trillion-dollar stock by 2035 is a bet on the long-term growth in U.S. consumer spending, and on an ever-expanding U.S. economy. Both seem like fairly safe bets. Not that it will occur in a straight line. It will likely even suffer periods of stagnation and decline. Overall, though, Visa seems an easy pick to hit a trillion-dollar valuation.
Meta Platforms (META)
Facebook owner Meta Platforms (NASDAQ:META) can see the end goal in the distance because it has a $788 billion as of this writing. It also once was worth over a trillion dollar not that long ago before the stock retreated. To borrow a football metaphor, it should easily be able to move the chains down the field again.
Whatever the problems people have with social media, and they are legion, billions still use them on a daily basis. Meta is the premiere social media platform, for good or ill. Facebook, Instagram, and WhatsApp are a killer trio of apps that engage a combined 3.8 billion monthly active users.
It also recently launched so-called Twitter-killer Threads. While it did manage to sign up 100 million users in a few days of launching, the jury is still out on whether it has legs. And few companies have as much invested in the metaverse as Meta Platforms. If that pans out as expected — even goes half the way — Meta will score big and should readily see its valuation rise.
AbbVie (ABBV)
The last potential trillion-dollar baby is AbbVie (NYSE:ABBV), the pharmaceutical stock spun off from Abbott Laboratories (NYSE:ABT) in 2013. With a market cap of just $268 billion, it is the one furthest away from achieving that valuation. Over the next dozen years, it will have to expand at a compounded rate of nearly 12% annually. That’s a tall order to be sure, but there is significant potential.
First, AbbVie has long relied upon its arthritis drug Humira for the bulk of its revenue. The therapy saw the first biosimilar hit the market in January after losing patent protection. Sales were already down by 25% by that point. Yet in the just completed second quarter, AbbVie still registered over $4 billion in net global Humira sales.
There will be more generic versions rolling out in the months and quarters to come. AbbVie, though, has a robust pipeline of drugs that will help fill the gap if not completely bridge it. It is also seeking to expand the drug’s indicated uses.
Plaque psoriasis treatment Skyrizi is a billion-dollar drug for AbbVie as is Rinvoq, a therapy for Crohn’s disease. More drugs are coming.
Whether any of them will be the massive hit Humira was remains to be seen. The continued advance of new therapies to market means AbbVie is an excellent growth stock to buy.
On the date of publication, Rich Duprey held a LONG position in ABBV stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
