Imagine a stack of $1 bills that reaches into the sky. It rises above the clouds. Above the International Space Station. The tower of cash reaches roughly one-fourth of the way to the moon. Now you have a mental picture of how much $1 trillion is.
For a company to be worth $1 trillion or more is a big deal. I think we're going to see more of them with such massive market caps. In fact, I predict there will be seven stocks worth more than $1 trillion in the next five years.
Image source: Getty Images.
Already in the club
It was really easy to predict four of the seven stocks. That's because they are already in the $1 trillion club.
Apple's (AAPL 0.52%) market cap currently stands at close to $2.58 trillion. I think it's highly unlikely that the company will lose more than 60% of its valuation over the next five years, which is what would be required for Apple to not be worth at least $1 trillion.
I have a similar view about Microsoft (MSFT -2.45%). The tech giant's market cap tops $2.1 trillion right now. My Motley Fool colleague Anthony Di Pizio thinks that Microsoft could become the world's first $5 trillion company by 2030. That wouldn't surprise me, although I suspect that Apple could get there first.
Alphabet (GOOG -1.96%) (GOOGL -1.97%) trails well behind Apple and Microsoft with a market cap of around $1.2 trillion. I expect that the company will be significantly larger than that within the next five years. Alphabet has several potential growth drivers, notably including its Google Cloud business and its artificial intelligence (AI) initiatives.
My prediction is that Amazon (AMZN -1.65%) will at least double in valuation by the end of this decade. Its market cap currently stands at a little over $1 trillion. I think that the cloud services market will expand significantly, with Amazon Web Services riding the wave.
Likely newbies
Let's now turn to the likely newbies to reach the $1 trillion mark. I put Nvidia (NVDA 3.71%) at the top of the list. The chipmaker's market cap currently stands at nearly $680 billion after its shares skyrocketed almost 90% this year.
The flurry of interest in AI fueled by OpenAI's ChatGPT paved the way for Nvidia's explosive performance. Could the stock lose some of its momentum? Sure. In fact, I fully expect Nvidia stock to be highly volatile. However, I also look for the increasing adoption of AI and the migration to the cloud to provide strong tailwinds for Nvidia.
Don't think that only tech stocks will cross the $1 trillion threshold, though. I predict that Berkshire Hathaway (BRK.A -0.30%) (BRK.B -0.26%) will join the group as well. The huge conglomerate's market cap of more than $670 billion isn't too far behind Nvidia's.
Like all of the potential members of the $1 trillion club, Berkshire will need a solid economy to boost its growth. Warren Buffett noted in his latest letter to Berkshire shareholders that the company is "more broadly aligned with the country's economic future" than any other U.S. business. I also think that Berkshire will put some of its massive cash stockpile to work in ways that contribute to its growth.
Finally, I anticipate that Tesla (TSLA 4.96%) will be worth more than $1 trillion within the next five years. The electric vehicle (EV) maker's market cap topped $1 trillion as recently as early 2022.
What will it take for Tesla to regain its previous high? That's easy -- continue to dominate the EV market. The demand for EVs will almost certainly increase over the next few years. If Tesla holds on to its market share, the company's market cap should climb back above $1 trillion.
Is bigger better?
Reaching a market cap of $1 trillion is certainly a great achievement for a company. But is bigger better? Yes and no.
Growing bigger is better than shrinking in size. However, the larger a company gets, the harder it is to find opportunities to continue growing at previous levels. I think that Apple, Microsoft, Alphabet, Amazon, Nvidia, Berkshire Hathaway, and Tesla are great companies, but they will have to work harder going forward to deliver exceptional growth.
