Meet the unstoppable growth stock that could join Apple, Nvidia and Microsoft in the $3 trillion club by 2029

It’s amazing how much things can change in just 20 years. Two decades ago, industrial and energy stalwarts General Electric and ExxonMobil were the most valuable companies measured by market capitalization, worth $319 billion and $283 billion, respectively. Flash forward to 2024 and technology concerns are at the fore.

Topping the list are three of the world’s most recognizable technology companies. Apple leads the pack at $3.4 trillion (as of this writing). Nvidia and Microsoft are close behind with a market cap of $3.1 trillion and $3 trillion, respectively.

With a market cap of just $1.9 trillion, it might seem premature to suggest so Amazon (NASDAQ: AMZN) it has all the necessary attributes for membership in the $3 trillion club. However, the stock has gained 42% over the past year and 109% over the past five years, and its rally looks poised to continue.

Recent improvements in the economy, the company’s strong market position and measured adoption of artificial intelligence (AI) could be the factors needed to fuel Amazon’s membership in this elite fraternity.

Performance improvement

The past few years have been full of challenges, not the least of which was an economic recession fueled by decades of high inflation. However, there has been a significant improvement in recent months as consumer sentiment hit a five-month high in September and the Federal Reserve Bank began its long-awaited campaign of interest rate cuts.

Improving economic conditions favorably affect Amazon’s results. In the second quarter, net sales of $148 billion rose 10% year over year, while diluted earnings per share (EPS) of $1.26 nearly doubled.

Improvements in each of the company’s major operating segments helped fuel the robust results. U.S. online sales rose 9%, while international sales rose 7%. Perhaps most important was a re-acceleration from Amazon Web Services (AWS) — the company’s cloud computing business — which rose 19%, its biggest growth rate since the end of 2022.

Equally important is advertising — the company’s fastest-growing business — which grew 20 percent as Amazon works to become a major player in the ad world.

An industry leader — in more ways than one

Amazon is the undisputed leader in e-commerce, which is an area in which it has pioneered. The company accounted for 38% of US digital retail sales last year, more than its next 15 biggest rivals. mixaccording to data compiled by eMarketer. This dominance is expected to continue into 2024, with the company expected to capture 40% of US online sales this year.

The story continues

The company has long used AI to maintain a competitive edge over its rivals. Amazon uses artificial intelligence to make product recommendations to customers and to predict and maintain appropriate inventory levels at its distribution centers and warehouses. The company also uses AI-powered robots to stock shelves and assemble goods for shipment, and deploys these advanced algorithms to determine the most efficient delivery routes.

Amazon is also a leader in cloud computing, another business it pioneered. Amazon Web Services (AWS) is the largest provider of cloud infrastructure services with 33% of the market in the second quarter, with Microsoft Azure in 2nd place and AlphabetGoogle Cloud is No. 3 with 20% and 10% of the market, respectively, according to research firm Canalys. Amazon offers one of the largest repositories of AI models for its cloud customers, which has helped re-accelerate its cloud growth.

Last but not least is Amazon’s digital advertising business. The company runs ads on its e-commerce site, Prime Video, Freevee, streaming services Amazon Music, video game streaming platform Twitch and more. The company uses AI to ensure that advertising reaches the target market. The results are undeniable, as advertising has been Amazon’s fastest growing business for several years running.

The Path to $3 Trillion

Amazon currently boasts a market cap of about $1.9 trillion, which means it will need stock price gains of about 57% to take its value to $3 trillion. According to Wall Street, Amazon is expected to generate $635 billion in revenue in 2024, giving it a forward price-to-sales (P/S) ratio of about 3. Assuming the P/S remains constant, Amazon would would need to grow its revenue to about $998 billion annually to support a $3 trillion market cap.

Wall Street is currently forecasting revenue growth for Amazon of 11% annually over the next five years. If the company hits that benchmark, it TO to achieve a market cap of $3 trillion just after 2029. It’s worth noting that Amazon has grown its annual revenue nearly 400% over the past decade, so these expectations may be conservative.

Additionally, Amazon currently trades at about 3.2 times sales, a slight discount from its average multiple of more than 3.3 over the past five years. That’s a pretty attractive price to pay for a company with so many ways to win.

Don’t miss this second chance at a potentially lucrative opportunity

Have you ever felt like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issue a “Double” stock. recommendation for companies that I think are on the way. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled in 2010, you would have $20,855!*

• Apple: if you invested $1,000 when we doubled in 2008, you would have $43,423!*

• Netflix: if you invested $1,000 when we doubled in 2004, you would have $392,297!*

Right now, we’re rolling out “Duplicate” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Duplicate” actions »

*The stock advisor returns as of October 7, 2024

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. Danny Vena has positions in Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool has positions and recommends Alphabet, Amazon, Apple, 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.

Meet the unstoppable growth stock that could join Apple, Nvidia and Microsoft in the $3 trillion club by 2029 was originally published by The Motley Fool