For more than a century, Wall Street has been a wealth-building machine for those who are patient. Over long periods, high-quality companies and the indexes they're a part of tend to increase in value.
Something else that's commonplace on Wall Street is change. It's perfectly normal for innovation, acquisitions, competitive advantages, and other factors to shake up the world's largest publicly traded companies on a fairly regular basis.
Just 18 years ago, companies like General Electric, AIG, and Intel were among the 10 largest publicly traded companies by market cap. As of Aug. 4, Intel wasn't even in the top 50 any longer, while GE and AIG had fallen out of the top 125 and top 250, respectively. Eight years from now, in 2030, the stock market's 10 largest stocks could look vastly different than they do today.
While absolutely nothing is set in stone, I predict that the following 10 stocks will have the largest market caps by 2030. Note that these 10 companies aren't listed in any particular order.
1. Berkshire Hathaway
The first stock, conglomerate Berkshire Hathaway (BRK.A -0.05%) (BRK.B 0.19%), should retain its spot in the top 10, even if billionaire CEO Warren Buffett isn't at the helm come 2030. After overseeing an average annual return on the company's Class A shares (BRK.A) of 20.1% since 1965, Buffett has clearly shown he's set his company up for long-term success.
One factor that makes Berkshire Hathaway such an incredible company is the mountain of passive income it collects every year. Over the next 12 months, Buffett's company is expected to bring in well over $6 billion in dividend income, with $4.25 billion coming from just a handful of companies. Because dividend stocks have a long history of outperforming nondividend payers, holding these time-tested companies for years or decades provides an added boost.
Perhaps the least-surprising prediction is that the largest publicly traded company in the U.S., Apple (AAPL 0.73%), will remain in the top 10 largest stocks by market cap by 2030.
Aside from an easily recognized brand name and faithful customer base, Apple's innovation is key to its success. Introducing a 5G-capable iPhone quickly pushed up its market share in the U.S., while CEO Tim Cook is busy leading a multiyear transition that emphasizes subscription services. Ultimately, subscriptions should boost Apple's operating margins and lessen the sales volatility witnessed during product replacement cycles.
Apple has also repurchased $520 billion worth of its own common stock since the beginning of 2013. If this aggressive buyback program continues, value investors are likely to continue plowing into Apple.
Payment processor Visa (V 1.05%) currently finds itself on the outside looking in (No. 11). By the turn of the decade, I expect it to firmly find itself as one of the 10 largest companies by market cap.
Visa's opportunity for expansion is enormous. Most global transactions are still being conducted in cash, which means it can expand organically into underbanked regions, such as the Middle East, Africa, and Southeastern Asia, or lean on acquisitions to grow (e.g., the Visa Europe buyout in 2016). Sustained double-digit annual growth should be the expectation throughout the decade.
What's more, Visa strictly sticks to payment processing. Although the company would probably do just fine as a lender, it would also expose Visa to potential loan delinquencies and losses during recessions. By avoiding lending, Visa is able to bounce back from economic downturns faster than its peers and maintain a profit margin above 50%.
Another FAANG stock that has an exceptionally high likelihood of retaining its top-10 ranking by market cap come 2030 is Alphabet (GOOGL 2.12%) (GOOG 2.23%), the parent company of internet search engine Google and streaming platform YouTube.
Google has long been Alphabet's foundational operating segment. Over the past two years, it's handled no less than 91% of global internet search share, a big reason why Alphabet sports such incredible ad-pricing power. As traffic acquisition costs decline over time, Google should continue to be a cash cow for the company.
But Alphabet's future is about its higher-growth initiatives like YouTube and Google Cloud. YouTube has grown into the second-most-visited social site in the world, while Google Cloud has gobbled up 8% of global cloud infrastructure spending.
Cloud-based customer relationship management (CRM) software provider Salesforce (CRM 1.02%) could make one of the biggest leaps (currently No. 43) in terms of market cap by 2030. CRM software is what's used to help businesses enhance customer relationships and boost sales.
Global CRM software sales are expected to sustain double-digit growth through at least mid-decade, which is great news for the industry's unquestioned leader. According to IDC, Salesforce commanded a 23.8% share of CRM software spending in 2021 (over four times its next-closest competitor).
In addition to its commanding market share, co-CEO and co-founder Marc Benioff has a penchant for making earnings-accretive acquisitions. These deals broaden the Salesforce ecosystem and help with the company's cross-selling opportunities.
Most folks know Amazon for its industry-leading online marketplace. In 2022, eMarketer projects that Amazon will account for 39.5% of all U.S. online retail sales. But the real crown jewel is the more than 200 million Prime members who've signed up as a result of its leading marketplace. The fees collected from Prime members help Amazon expand its logistics network and reinvest in high-growth initiatives.
There's also Amazon Web Services (AWS), which is the global No. 1 in cloud infrastructure spending with 33% market share. Corporate cloud spending is still in its early innings, which means Amazon's operating cash flow could skyrocket in the years ahead.
7. PayPal Holdings
Digital payments are still in their infancy, which bodes well for fee-based payment platforms. Even with U.S. gross domestic product declining in back-to-back quarters, PayPal's total payment volume on its network continues to grow by a double-digit percentage on a constant-currency basis.
Arguably even more important, active users are more engaged than ever. At the end of 2020, active users were completing 40.9 transactions over the trailing 12 months (ttm). This figure is up to 48.7 transactions per active account on a ttm basis through June 2022, and it continues to climb.
Software kingpin Microsoft (MSFT 1.78%), the only company from the 10 largest stocks by market cap in 1999 to still have a top-10 position today, has a good shot at sustaining its dominance throughout the decade.
Microsoft's success is a function of raking in mammoth amounts of cash flow from its legacy operations and funneling this cash into faster-growing projects. For instance, even though its high-margin Windows franchise is generally a slow grower, it still accounts for a 76% share of global desktop operating systems.
Microsoft is utilizing this cash flow to reinvest in a variety of cloud initiatives -- Azure is the global No. 2 in cloud infrastructure spending and grew sales by 46% on a constant-currency basis in the June-ended quarter -- and fuel acquisitions. For instance, Microsoft offered $68.7 billion to acquire gaming company Activision Blizzard in January.
Despite a feverish renewable energy push by most developed countries, I predict oil and gas major Chevron (CVX -2.33%) will find its way into 10 largest publicly traded companies by market cap in 2030.
The biggest reason for this push is the expectation that oil and natural gas prices will remain elevated for many years to come. The pandemic resulted in multiple years of reduced domestic and international drilling and pipeline investment. Couple this with Russia's invasion of Ukraine, and you'll see there's a clear risk to global energy supply.
Chevron is also in excellent financial shape compared to most other integrated oil stocks. By prudently deploying its capital and minimizing debt, Chevron has been able to maintain its superior dividend, repurchase its own stock, and fund key natural gas projects in the Asia-Pacific region.
10. Meta Platforms
Lastly, social media stock Meta Platforms (META 1.54%), the company formerly known as Facebook, should find itself as one of the 10 largest stocks in 2030. You'll note that current top-10 stocks Tesla (TSLA 5.93%), UnitedHealth Group (UNH 0.23%), Nvidia (NVDA 1.20%), and Johnson & Johnson (JNJ 0.12%), didn't make the cut.
Although social media usage statistics can be extremely fickle to project one year in advance, let alone in eight years, Meta has four of the most downloaded apps in the world. On a combined basis, Facebook, Instagram, WhatsApp, and Facebook Messenger attracted 3.65 billion monthly active users in the June-ended quarter. That's over half the global adult population and a big reason why Facebook's ad-pricing power is exceptionally strong more often than not.
The wild card is the company's metaverse ambitions, the "metaverse" being the next iteration of the internet that allows connected users to interact with each other and their surroundings in a 3D virtual environment. It will be years before the necessary infrastructure is in place to support the metaverse. But once there, Meta's hefty investments could make it a key player in this potentially $30 trillion opportunity.