Apple became a $3 trillion company on Jan. 3, 2022, but it only held that title for a short time. Coincidentally, the S&P 500 dropped into a bear market that same day, dragging Apple and many other stocks down with it. Even so, Apple still has a market capitalization of about $2.6 trillion, and the company should have no trouble regaining its $3 trillion status in the coming years.
Here are two other growth stocks that could join Apple in the $3 trillion club by 2030.
1. Amazon
Amazon (AMZN 0.98%) operates the most popular e-commerce marketplace in the world, drawing nearly twice as many shoppers as its next-closest digital retail rival, and it accounted for $0.38 of every $1 consumers spent online in North America and Western Europe last year. Amazon solidified its leadership with logistics and digital advertising solutions for merchants, as well as Prime member benefits (e.g., fast shipping, streaming content) for consumers, making its marketplace more compelling on both sides.
NASDAQ: AMZN
Key Data Points
Additionally, Amazon Web Services (AWS) is an indomitable force in cloud computing. In 2022's fourth quarter, it captured a 32% share of the cloud infrastructure and platform services market, which was 9 percentage points more than the No. 2 vendor. IT consultancy Gartner says AWS has an unmatched capacity for innovation that has translated into an unparalleled product portfolio. In other words, investors have good reason to believe AWS will retain its leadership position.
Finally, Amazon is the fourth-largest seller of digital advertising in the world, a position that reflects the popularity of its marketplace and streaming platform. Those assets not only engage consumers, but they also generate lots of consumer data. That makes Amazon a valuable advertising partner for brands, much like Google Search and YouTube make Alphabet a valuable advertising partner. But Amazon is actually taking market share away from Alphabet.
Researchers forecast that the e-commerce, cloud computing, and adtech markets will grow at an annualized rate of roughly 14% each year through 2030, meaning Amazon could nearly triple its revenue during that time by merely matching those markets' average growth rates. That gives Amazon a good shot at reaching $3 trillion by 2030, or even $5 trillion by 2033.
It's worth mentioning that Amazon has struggled amid the challenging economic environment. The company posted a loss last year, its first loss since 2014, as high inflation suppressed consumer spending and amplified operating expenses. However, Amazon responded with cost-cutting measures, including reducing headcount across multiple departments, slowing its expansion into physical retail, and delaying the opening of its second headquarters.
Those efforts seem to be paying off. The company returned to profitability in the first quarter of 2023, and investors have good reason to believe that momentum will persist. Retail sales represent the majority of total revenue, and retail sales growth should reaccelerate in a more favorable economic environment. But Amazon's cloud computing and digital advertising segments will likely grow more quickly, and both come with higher margins than retail.
2. Microsoft
Microsoft (MSFT +0.93%) offers a broad range of cloud software and services that are critical to millions of organizations worldwide. Its core productivity suite, Microsoft 365, is the most popular software product in any category, but the company also has a strong presence in communications, enterprise resource planning, and cybersecurity software. All three of those markets are expected to grow at a double-digit pace through the end of the decade.
NASDAQ: MSFT
Key Data Points
Microsoft also has strong growth prospects in cloud computing. Microsoft Azure held a 23% market share in cloud infrastructure and platform services in the fourth quarter of 2022, up from 21% in the prior year. Management says it has the most powerful artificial intelligence (AI) infrastructure in the world, and its partnership with OpenAI should bring more businesses to Azure in the future. That bodes well for Microsoft, because the cloud computing market is expected to grow at a rate of 14% annually through 2030.
Additionally, Microsoft is the seventh-largest adtech company, and investors have good reason to believe it can take market share in the years ahead. Microsoft has an exclusive partnership with Netflix, which positions it to benefit as more ad dollars shift to streaming media. The company is also bringing ChatGPT-like functionality to its search engine, Bing, in an effort to take share from Google. That would also benefit its advertising business. The adtech market is expected to grow by 14% annually through 2030.
Microsoft currently has a market capitalization of $2 trillion. That figure would need to increase by 5% annually to reach $3 trillion by the end of the decade, which seems quite plausible given that its market capitalization increased at 25% annually over the last five years. Shares currently trade at a reasonable 10 times sales, and if Microsoft can grow revenue by 6% annually through 2030 -- a conservative estimate compared to revenue growth of 15% annually over the last five years -- the company's market capitalization could reach $3 trillion while its price-to-sales multiple dropped slightly.
However, given Microsoft's strong presence in several quickly growing markets, investors can reasonably expect its top line to grow faster than 6%. That means the stock could blow by $3 trillion and head toward $4 trillion by the end of the decade.
