Prediction: This will be Wall Street’s first $5 trillion stock

It wasn’t long ago that investors wondered which stock would be the first to reach a $1 trillion market cap. Today, seven stocks have a market cap of at least $1 trillion, with two more knocking on the door.

But the bar has been raised. A $1 trillion market cap is ho-hum now. Which stocks will be Wall Street’s first $5 trillion? Here is my prediction.

Some worthy contenders

I think there are some worthy contenders to become the first member of the $5 trillion club. And they have one common denominator: leadership in artificial intelligence (AI).

Microsoft emerged as an AI superstar after teaming up with ChatGPT creator OpenAI. The tech giant could have a clear path to a peak market value of $5 trillion if organizations continue to turn to the cloud to build and deploy generative AI applications.

No company has dominated the AI ​​scene like Nvidiahowever. Demand for Nvidia’s graphics processing units (GPUs) has been staggering, as customers have been buying them out of hand to power their AI models. Don’t let the recent pullback for this stock fool you: Nvidia could be back to its winning ways soon.

Some may see Google parent Alphabet as an underdog in the race to $5 trillion. Antitrust regulators are targeting the company for its market dominance in digital advertising. However, I wouldn’t underestimate Alphabet. It has been an artificial intelligence pioneer for years and has a particularly big opportunity for growth with its self-driving car unit Waymo.

And I wouldn’t be surprised if Amazon it is one of the first to surpass the $5 trillion mark. Like Microsoft and Google, it is a leader in cloud services (in fact, Amazon Web Services is the market leader in this space). The company is also continually expanding into new arenas, the planned launch of a satellite internet business being the latest example.

My $5 trillion pick

However, as much as I like Microsoft, Nvidia, Alphabet, and Amazon, I don’t think any of them will be the first to reach a $5 trillion market cap. Instead, I predict Apple (AAPL -0.70%) will get there first.

It certainly helps that Apple has an advantage over other competitors. The company’s market capitalization already exceeds $3.3 trillion. If Apple’s stock price grows at a compound annual growth rate of 9% over the next five years, it will surpass the $5 trillion mark.

You’ll sometimes hear that in football, the best offense is a strong defense. I think this can be true in business as well. Apple has an exceptionally strong “defense” with its fiercely loyal customer base and sticky ecosystem of products and services. This should help prevent the company’s market cap from falling and allow innovations to drive growth.

What innovations from Apple are on the way? The most obvious is Apple Intelligence, the company’s first generative AI functionality. Some Wall Street analysts believe that the upcoming release of Apple Intelligence will ignite a new super cycle of iPhone upgrades.

I think we’ll see more from Apple on the augmented reality front, too — and not just with its Apple Vision mixed reality headset. Also, 6G wireless networks could be available by 2030, enabling exciting new capabilities like viewing holographic images on your iPhones. Just the anticipation of this could push Apple past the $5 trillion market later this year. decade.

I could be wrong

I’ll be the first to admit that my prediction could be completely wrong. Maybe I’m relying too much on Apple’s innovations to fuel growth. However, I suspect that if I am wrong about Apple becoming the first $5 trillion stock, it will be because one of the other stocks I mentioned reaches that level earlier.

It’s easy for me to imagine many scenarios where another stock overtakes Apple at a $5 trillion market cap. Perhaps Artificial General Intelligence (AGI) is on the way, with Nvidia GPUs becoming more critical than they are now. A major breakthrough in quantum computing could be made by Alphabet, Amazon or Microsoft. Another development could come out of left field from a company we haven’t mentioned that’s game-changing.

However, based on the way things stand now, I think Apple has the best chance to reach a $5 trillion market cap first. Even if I’m wrong, the stock should be a solid winner for investors over the next decade and beyond.