Discover 3 Super Powerful Growth Stocks That Will Be Worth $4 Trillion by 2025, According to Certain Wall Street Analysts

Technological advancements over the past few years have had a marked impact on the valuations of some of the most well-known companies in the technology space. As artificial intelligence (AI) adoption continues to grow, the market capitalization of the technology’s major beneficiaries is also increasing. If you look at the list of the world’s most valuable companies, you’ll see that the top five, eight out of the top ten, are inextricably linked to generative AI.

Currently, there are only seven companies in the $1 trillion market capitalization club, and only three companies are worth more than $3 trillion. Debate rages over which company will be the first to reach a $4 trillion valuation. But Wedbush analyst Dan Ives believes investors may be missing the forest for the trees, suggesting there are actually three companies that could become founding members of the $4 trillion club within 12 months.

Let’s take a look at the three most likely contenders and what will get them across the finish line.

Image source: Getty Images.

1. Nvidia

For those who have followed technological advancements over the past few years, the following will not be surprising. nvidia (NVDA 2.25%) It’s at the top of the list. The company is currently the most valuable company in the world, with a market capitalization of $3.38 trillion (as of this writing). As a result, Nvidia would only need a share price increase of about 18% for its valuation to exceed $4 trillion.

The chipmaker’s graphics processing units (GPUs) provide the computational power needed to advance AI and have become the gold standard for running generative AI models in data centers and the cloud. By some estimates, Nvidia controlled 98% of the market last year, and that doesn’t seem likely to change anytime soon.

Investors have wondered whether the unprecedented demand will continue, but the available evidence is compelling. microsoft (MSFT 1.25%), meta platform, Amazonand alphabet It’s one of Nvidia’s biggest customers. These tech giants all reported results last week and announced plans to increase capital spending to keep up with demand for AI. What’s more, much of it will go into the chips and servers needed to fuel AI, suggesting Nvidia will benefit from the significant spending.

“The first one to reach would be Nvidia, because they are the only game in town,” Ives said. “Their GPUs are the new oil or gold of the tech world with no real competition.”

I think Ives is perfect. As the undisputed leader in the GPU space and a dominant force in the market, Nvidia is at the top of the heap and will be the biggest beneficiary of continued generative AI adoption. Moreover, the company’s margins have expanded along with its market share, making Nvidia much more profitable.

2. Apple

apologize (AAPL 2.14%) Although it recently lost the top spot to Nvidia, it still trails the chipmaker with a market capitalization of about $3.35 trillion. The iPhone maker needs just a 20% share price increase to hit the $4 trillion threshold, and there are plenty of catalysts to get there.

In the fourth quarter of fiscal 2024 (ending September 28), Apple’s revenue grew 6% year-over-year, reaching a September quarter record, and adjusted earnings per share (EPS) increased 12%. The company said its active installed base of devices has hit an all-time high. The biggest driver was the debut of the iPhone 16 with Apple Intelligence, the company’s on-device AI. It’s important to note that the results include only nine days of new iPhone sales, so more information is likely to come in the future.

Ives believes that the difficult economic conditions of the past few years have made consumers reluctant to splash out on new smartphones. There are about 300 million iPhones that haven’t been upgraded in the past four years, which represents fertile ground for Apple to cultivate. Ives suggested that Apple could start a new supercycle by selling up to 240 million iPhones in fiscal 2024.

I think the analysts’ logic is indisputable. An improving macroeconomic environment and Apple’s loyal customer base could be a catalyst for the launch of a new AI-powered iPhone, which could solidify the company’s potential to soon become a member of the $4 trillion club.

3. Microsoft

Microsoft is currently the third most valuable company in the world with a market capitalization of $3 trillion. So the stock is 32% below its $4 trillion benchmark. The company quickly unveiled Copilot, a suite of AI-powered productivity tools, followed quickly by Copilot-powered PCs. This is in addition to the AI ​​models available to cloud customers. The move helped Microsoft benefit from increased AI adoption.

During the first quarter of fiscal 2025 (ending September 30), Microsoft’s Azure Cloud grew 33% year-over-year, with executives saying demand for AI services drove 12 percentage points of the growth. This is an increase from 8% in the fourth quarter. This helps demonstrate the continued success of Microsoft’s broader AI strategy.

Ives said Microsoft’s AI revenue is expected to exceed $10 billion in the second quarter and will accelerate further in the second half of fiscal 2025. He also estimates that 70% of Microsoft’s customer base will use AI solutions within three years. , which could push the stock price higher.

I think Ives spends his money well. Microsoft’s technology will expand across both enterprise and consumer markets, and its AI-based products will surpass those of its cloud competitors, driving additional growth in the coming years.

A word about valuation

According to Bloomberg Intelligence, the generative AI market is expected to grow to $1.3 trillion by 2032, at a compound annual growth rate (CAGR) of 42% over the next decade.

Despite the scale of the opportunity they pursue, Apple, Nvidia, and Microsoft still offer attractive pricing at 32x, 30x, and 28x future earnings. When viewed in the context of such a large and growing market, the opportunity is clear.