History is proof that the stock market always goes higher in the long run, but the individual stocks that have the most impact on benchmark indexes like the S&P 500 and Nasdaq 100 change regularly. Oil and gas giant ExxonMobil, for instance, was the largest company in the world in 2013. Now it's not even in the top 30.
While fossil fuels play a decreasing role in modern society, technology is doing the opposite. That's why the top five stocks in the U.S. today are all tech giants, and our Motley Fool contributors think Meta Platforms (FB 1.18%), Sea Limited (SE 2.15%), and Tesla (TSLA +3.93%) will be high up the ranks by the middle of the next decade.
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Future social networks will exist in the metaverse
Anthony Di Pizio (Meta Platforms): First, let's address the elephant in the room. From Dec. 1 Facebook (the company, now known as Meta Platforms) will change its stock ticker to MVRS -- an abbreviation of metaverse. All of the flagship platforms will retain their branding, including Facebook, Instagram, and WhatsApp, but the company will shift its focus to an innovative new world grounded in virtual reality.
CEO Mark Zuckerberg thinks the next generation of social networks won't be on-screen, but rather felt with a greater sense of presence using digital avatars of ourselves. The metaverse will allow us to retain an inventory of digital goods and give us the ability to teleport to different experiences. But it's also likely to have its own self-sustaining economy, which is where the big financial opportunity is for Facebook.
Without a doubt, the company is the best in the world at connecting people, which is why 2.9 billion users are on its platforms each month. Therefore it's a safe bet it will seek to own the architecture that defines the metaverse, but Zuckerberg acknowledges it can't build the whole thing on its own. It's going to take a collaborative effort from both software and hardware companies (think advanced semiconductors in the form of graphics cards), but while Meta's current platforms earn most of their money through advertising, the metaverse could allow it to earn money in brand new, creative ways.
Analysts expect the company will generate $117.7 billion in revenue for the 2021 full year, and that's a whopping 3,081% increase compared to the $3.7 billion it delivered in 2011. While it's currently ranked 7th on the list of the largest companies by market capitalization right now, by 2035 Meta Platforms could be right at the top -- thanks to its creation of an entirely new world.
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Sea Limited: A giant in the making
Jamie Louko (Sea Limited): One of the ways Amazon built its fortress was by building optionality. It started as a bookstore, but now it has AWS, Prime, and the biggest e-commerce operation in the world. Sea Limited's path to becoming one of the biggest stocks in the next 15 years is similar. With three diverse revenue streams, Sea Limited's optionality is amazing, and the company is seeing wild success around the world.
Sea has three businesses: its gaming segment (Garena), its e-commerce segment (Shopee), and its financial services segment (SeaMoney). Garena is the leading mobile game developer across 130 markets, with its mobile game Free Fire becoming one of the most popular mobile games in the world. Free Fire has held the title for the highest-grossing mobile game for the past eight quarters in Southeast Asia and Latin America and the last three quarters in India. Even in the U.S., Free Fire was the highest-grossing mobile battle royale game the last two quarters according to App Annie.
Shopee has seen similar dominance in Southeast Asia and Brazil: It ranks highest in monthly active users in Southeast Asia and downloads in Brazil in the shopping app category. SeaMoney is Sea's smallest segment, but it saw 150% increases in total payment volume in Q2 2021 compared to the year-ago quarter. All of this dominance led to Q2 revenue growth of 159% compared to Q2 2020 to $2.3 billion while its net loss increased just 10% to $434 million.
Sea doesn't want to stop at just Southeast Asia and Latin America, however. The company has recently expanded into Poland, and is rumored to also enter Spain and potentially France. With this aggressive expansion comes increased competition, namely from Amazon in Europe, MercadoLibre in Latin America, and Coupang in Southeast Asia.
This company is worth over $190 billion, yet it's still growing at triple-digit rates. While this company might be highly valued at 25 times sales, its growth and dominance more than justify its high price, and if it can execute even half as well as it has over the past two years, it could become one of the biggest companies in 15 years.
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The future of mobility
Trevor Jennewine (Tesla): Over the next 15 years, the automotive industry is set to undergo two massive transformations. Electric vehicles (EVs) will gradually replace their fossil fuel-powered predecessors, and self-driving cars promise to make travel safer and more convenient. In both cases, Tesla has an edge.
The company sold over 627,000 electric cars through the first three quarters of 2021, capturing 21.5% market share. That's seven percentage points more than the next closest automaker. At the same time, Tesla's manufacturing efficiency is starting to differentiate it from the pack, as evidenced by its 14.6% operating margin in the most recent quarter. To put that in perspective, Volkswagen, General Motors, and Ford Motor Company posted operating margins of 4.6%, 6.1%, and 7.5%, respectively.
Tesla has also established itself as a leader in autonomous technology. Generally speaking, artificial intelligence requires three things: high-quality data, powerful training hardware, and powerful inference hardware. And Tesla has an advantage in all three categories.
In 2019, the company designed its own in-car supercomputer, a processor that (at the time) was six years ahead of anything else on the market, according to the Nikkei Asia Review. In 2020, director of artificial intelligence Andrej Karpathy said Tesla's autopilot-enabled fleet had captured over 3 billion miles worth of driving data, and some analysts put that figure at over 5 billion today; meanwhile, Alphabet's Waymo said it had 20 million and General Motors' Cruise reported 2 million around the same time. Finally, Tesla announced the D1 chip at its most recent AI Day, a semiconductor that will theoretically make its Dojo supercomputer the fastest AI training machine in the world.
Why does that matter? Back in September 2020, CEO Elon Musk told investors: "About three years from now, we're confident we can make a very compelling $25,000 electric vehicle that's also fully autonomous." No other company has made a similar claim, and if Tesla hits that mark, it would once again be a first mover in a potentially massive industry. Specifically, ARK Invest values the markets for self-driving EVs and autonomous ride sharing services at $250 billion and $1.2 trillion, respectively, by 2030. And Tesla would be well positioned to capitalize on both opportunities.
That's why -- if all goes according to plan -- I think Tesla will (still) be one of the biggest companies in the world by 2035.
