I'll admit that I have no idea which stock will deliver the biggest returns over the next 10 years. If I had to guess, it would probably be a stock that hardly anyone has heard of right now. After all, the unknown tiny stocks have the most room to run.
But identifying the most important stock to own over the next decade is a different story. By my definition, the most important stock will be one that's most likely to have a profound impact on the greatest number of people.
The trends that matter most
We can look around today to see which trends are likely to matter the most over the next decade. Perhaps the most critical trend is the growing senior population across the world.
The U.S. Census Bureau projects that 2030 will be a turning point for the country with every member of the baby boomer generation over age 65. Nearly 25% of residents of the European Union will be at least 65 years old 10 years from now. Over 25% of Chinese citizens will be at least 60 years old by 2030. The percentages in other heavily populated Asian countries are even higher.
There lots of implications from these demographic trends. Hundreds of millions of people will have more time on their hands, for one thing. More importantly, though, the demand for healthcare products and services will almost certainly increase significantly.
Another key trend that should shape the next decade is the expanded role of artificial intelligence (AI). There has been a dramatic surge in the use of AI in recent years. Just ask your smartphone. But I expect the 2020s will usher in an era where AI is even more pervasive, from smarter apps to self-driving cars. This shift to increased use of AI will likely add fuel to the fire of another unstoppable technology trend -- the migration of apps and data to the cloud.
Speaking of trends that are already under way and should pick up momentum, how often do you use cash these days? If you're like most people, the answer is "at little as possible." The war on cash (i.e., the transition to digital payment methods) should intensify over the next decade.
Of course, there are other important trends that will impact many people in the 2020s. However, few will rival the significance that aging demographics, the increased prevalence of AI, and the war on cash will have.
From A to Z
Quite a few companies will play a role in at least one of these critical trends shaping the next decade. But a handful will be involved in all of them. I'd argue that Alphabet is the one company that covers the major trends from A to Z and that will make the biggest difference overall.
Let's start with aging demographics. Alphabet's apps, particularly Google Search and YouTube, are likely to be used much more frequently as older individuals have more leisure time. The more significant impact for the company, though, could be in healthcare.
Alphabet's Verily Life Sciences subsidiary is working with DexCom on the development of its cutting-edge G7 continuous glucose monitoring (CGM) system. Verily is collaborating with several major drugmakers, including Novartis and Pfizer, on Project Baseline -- an effort to map a baseline of human health. This project could change how new drugs are developed and improve the quality of care provided to patients.
Another Alphabet subsidiary, Calico, has an even more ambitious goal: extending the human lifespan. There's no guarantee that Calico will unveil earthshaking developments over the next 10 years, but it might.
But I'd say that it is a certainty that Alphabet will be at the forefront of AI development in this decade. It already ranks as a leader in AI and has the resources to stay on top. Alphabet's Waymo unit expects to expand its fleet of self-driving cabs beyond the initial testbed in Phoenix, Arizona. It's partnered with Jaguar to develop the first fully self-driving car. And Waymo's self-driving big-rig trucks could move out of the testing phase in the not-too-distant future.
Alphabet is also addressing two major trends at the same time by applying AI to healthcare. The company's DeepMind AI lab achieved a big breakthrough last year by using AI to predict a potentially fatal kidney disease 48 hours before it became critical. Alphabet's AI can even detect breast cancer more accurately than most human radiologists.
On top of all of this, Alphabet is also a major player in the war on cash with its Google Pay digital payment platform. Google Pay is available on more than 2.5 billion active Android devices worldwide. Alphabet even plans to launch online checking accounts for Google Pay users in 2020.
Important to investors
I don't expect Alphabet will be the best-performing stock of the decade. It's too big already. The good news, though, is that Alphabet's role in the key trends for the next 10 years should also lead to big stock gains.
Despite its $1 trillion market cap, Alphabet is still a growth stock. Its core businesses should power plenty of growth on their own. But I think that the company's healthcare, AI, and digital payment efforts will pay off in a major way, too. My view is that Alphabet is the most important stock to own over the next decade but also a winning stock to own over the next decade.