2 stocks that will be worth more than Microsoft 10 years from now

Microsoft is the second largest company in the world with a market capitalization of just under $3 trillion at the time of writing. The tech giant has been able to achieve this position due to its strong presence in several applications such as cloud computing, its popular Windows operating system and workplace collaboration tools.

Artificial intelligence (AI) has proven to be another solid growth driver for Microsoft of late, contributing to an acceleration of the company’s growth in recent quarters. However, Microsoft is not the only tech giant using artificial intelligence as a springboard to boost its growth. Nvidia (NASDAQ: NVDA) and Meta platforms (NASDAQ: META) also benefit from the booming adoption of AI in their respective industries.

Let’s take a closer look at the outlook for Nvidia and Meta platforms over the next decade to see why they have the potential to overtake Microsoft’s market cap in the long term.

1. Nvidia

Nvidia is currently the third largest company in the world after Microsoft with a market capitalization of $2.56 trillion. The semiconductor specialist’s value has risen remarkably since late 2022, when it became apparent that its graphics processing units (GPUs) in data centers will play a central role in the proliferation of AI.

Microsoft’s OpenAI partner used Nvidia GPUs to train ChatGPT, the generative AI chatbot that exploded in popularity after its launch in late 2022. Since then, tech giants around the world have lined up to buy GPUs Nvidia’s AI to train and deploy AI models. This has allowed the chipmaker to control more than 80% of the AI ​​chip market, leaving very little for rivals such as AMD.

KeyBanc Capital Markets analyst John Vinh estimates that Nvidia could generate a whopping $200 billion in data center revenue next year, with demand for its next-generation Blackwell AI chips stronger than expected. That would be a significant jump over the $47.5 billion in data center revenue reported by Nvidia last year.

Meanwhile, consensus estimates indicate that Nvidia’s data center revenue could rise to $140 billion next year, which would still be a significant jump from its revenue from the segment last year. For perspective, AMD expects to sell $4.5 billion worth of data center GPUs this year, which shows how dominant Nvidia has been in this market.

Given that Nvidia will release a new AI GPU every year, compared to its previous plan to refresh its lineup every two years, it could continue to hold a solid share of the AI ​​chip market 10 years from now. With the total GPU market expected to be worth $1.16 trillion in 2034, according to Future Market Insights, Nvidia’s strong position in this market is setting it up for robust growth over the next decade.

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Moreover, analysts expect Nvidia’s earnings to reach an annual growth rate of 42% over the next five years. That’s higher than the 13% annual growth in earnings that Microsoft is expected to produce over the same period.

Nvidia’s huge end-market opportunity and dominant market share suggest it could continue to grow at a faster pace than Microsoft beyond the next five years, potentially into the next decade. As such, it won’t be surprising to see Nvidia eventually overtake Microsoft’s market cap after 10 years.

2. Meta Platforms

Meta Platforms is currently the seventh largest company in the world with a market capitalization of $1.25 trillion, which means it is some distance behind Microsoft. However, the impressive pace at which Meta has grown recently due to the growing adoption of its AI-based advertising tools suggests that it could maintain a healthy growth rate over the next decade.

According to eMarketer, digital ad spending could grow by 13.2% in 2024. Meta is poised to grow at a faster rate than the industry in which it operates. The company’s revenue in the first six months of the year rose 24% to $75.5 billion. . Its revenue forecast of $39.75 billion for the current quarter would translate to year-over-year growth of 16%, which would again be faster than the pace at which digital ad spending is expected to increases this year.

Meta’s ability to generate higher returns for advertisers with AI-powered ad campaigns helps the company attract more advertising dollars. Management said on the recent earnings conference call that US advertisers have seen a 22% increase in returns after adopting Meta’s AI-based advertising tools such as Advantage+.

These AI tools enable advertisers using Meta Offers to improve audience targeting, drive incremental purchases from that audience, and reduce acquisition costs. Meta saw a 10% year-over-year increase in delivered ad impressions in Q2, along with a 10% improvement in average cost per ad.

The global digital advertising market is expected to be worth a whopping $1.76 trillion in 2034, up from this year’s estimated revenue of $467 billion, according to Prophecy Market Insights. Meta is expected to generate $161 billion in revenue in 2024, meaning it could end the year with a third of the digital advertising market under its control.

If the company continues to capture a larger share of this lucrative end-market opportunity over the long term, its revenue could grow significantly in the future. Assuming Meta could increase its digital advertising market share to 40% in 2034, its revenue could reach $704 billion. That would be more than four times the company’s estimated 2024 revenue.

Given that the US tech sector has a price-to-sales ratio of 7, Meta could see significant expansion in its market cap over the long term if it trades at that valuation. So Meta Platforms indeed has the potential to become a bigger company than Microsoft in the next decade due to its growing influence in the digital advertising market.

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, 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: 2 Stocks That Will Be Worth More Than Microsoft in 10 Years was originally published by The Motley Fool