These 2 stocks will be bigger than Nvidia by 2030

You can’t go a day without hearing or reading about it Nvidia. The company powering the artificial intelligence (AI) revolution now has the world’s third-largest market capitalization at more than $2.8 trillion. Investors are betting big on its continued growth, valuing the stock at a premium price-to-earnings (P/E) ratio of 63 right now.

Optimism is high, but I think it’s time to zig while others zag. Here are two stocks with smaller market caps than Nvidia that I believe will surpass them by 2030.

Alphabet: The Real AI Winner?

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) it is the fourth largest company in the world by market capitalization, one place behind Nvidia. With Google Search, YouTube and Google Cloud, it has dominated the consumer internet landscape for most of the 21st century. It leads the digital advertising space as billions of users worldwide interact regularly with Google and YouTube.

Last quarter, Google Search revenue was up 14% year-over-year, YouTube advertising revenue was up 13%, and Google Cloud revenue was up 29%. This impressive overall growth drove the company’s operating income to an all-time high of $98 billion over the past 12 months. That’s significantly higher than Nvidia, which generated less than $50 billion in operating earnings.

Investors may have been scared away from investing in Alphabet because of the narrative that it was lagging behind in AI. In late 2022, OpenAI released ChatGPT to the masses and then received a huge investment from Microsoft. For a brief period, it appeared that Alphabet was losing the race in new conversational and creative AI tools.

Today, it has demonstrated the ability to copy and even surpass all OpenAI innovations, which should provide comfort to investors. It appears that Google and Alphabet in general are now leaders in AI.

There is still a lot of room for growth as internet usage increases worldwide and cloud computing gains more market share. And there’s the potential of these new AI tools, which it’s incorporating into its new devices, like its Pixel phones. With higher earnings today and a long growth track, I think the company has a good chance of having a larger market cap than Nvidia by 2030.

Amazon: More of the same

Amazon (NASDAQ: AMZN) it is the sixth largest company in the world with a market capitalization of $1.8 trillion. The dominance of e-commerce and cloud computing has allowed it to continue to grow even at such a large size.

In the past 12 months, revenue has reached $600 billion, up from about $100 billion 10 years ago. And it shows no signs of slowing down, with revenue up 10% year-over-year last quarter.

The story continues

Profitability has always been a concern for Amazon, but new CEO Andy Jassy has eased those worries. Operating margin rose to an all-time high of 9% in the last 12 months and 10% in the last quarter. With the growth of higher-margin advertising, subscription and third-party e-commerce services, consolidated profit margins should only increase.

Compared to Nvidia — which already has sky-high margins — Amazon can grow earnings at an impressive clip, expanding its underlying profit margin while growing sales.

It already generates more operating income than Nvidia. Assuming it can reach $1 trillion in revenue by 2030 and operating margins of 15%, Amazon’s operating income will grow to $150 billion by the end of this decade. If that happens, I think it will have a bigger market cap than Nvidia in 2030.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. Brett Schafer has positions in Alphabet and Amazon. The Motley Fool has positions and recommends Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool recommends the following options: long $395 January 2026 Microsoft calls and short $405 January 2026 Microsoft calls. The Motley Fool has a disclosure policy.

Prediction: These 2 Stocks Will Be Bigger Than Nvidia By 2030 was originally published by The Motley Fool