Artificial intelligence (AI) is hot right now. Some might argue that it's too hot.
The valuations of many of the biggest AI leaders have skyrocketed so far this year, but there's still a lot of room for them to run over the next few years. My prediction is that six AI stocks will be worth a combined $20 trillion or more by 2030.
AI's big six
It's no coincidence that 6 out of the 7 biggest stocks based on market cap that trade on U.S. exchanges have a major focus on AI. These big six of AI are:
| Stock | Market Cap |
|---|---|
| Apple (AAPL +1.95%) | $2.7 trillion |
| Microsoft (MSFT +1.92%) | $2.4 trillion |
| Alphabet (GOOG +1.28%) (GOOGL +1.76%) | $1.6 trillion |
| Amazon (AMZN -2.15%) | $1.2 trillion |
| Nvidia (NVDA +2.76%) | $934 billion |
| Meta Platforms (META -0.16%) | $648 billion |
Data source: Google Finance. Market caps as of May 26, 2023.
Nvidia has been a monster winner so far this year. The company's guidance in its first-quarter update absolutely stunned investors. Nvidia expects its Q2 revenue to jump 64% year over year, thanks to the soaring demand for AI chips.
NASDAQ: NVDA
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Meta Platforms is another shooting star of 2023. Its stock has more than doubled. The AI fervor has helped tremendously, but Meta also beat expectations with its Q1 results, thanks to renewed growth in advertising on its social media platforms.
NASDAQ: META
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All of the other big six AI stocks have delivered year-to-date gains of over 30%. Alphabet has been the best performer of the four, with shares rising almost 40%. The company seemed to be initially caught off guard by the launch of OpenAI's ChatGPT but quickly responded with its own products.
NASDAQ: GOOGL
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Investors applauded Microsoft's rapid moves to integrate OpenAI's technology into its products. Amazon introduced several new generative AI tools in recent months. And while Apple appears to be lagging in its public AI advances, its stock has still benefited from the AI tailwinds.
How they'll get to $20 trillion
Currently, the combined market cap of the six top AI stocks totals around $9.5 trillion. How can they get to $20 trillion by 2030? Their paths will vary.
First, it's important to note that AI isn't the only growth driver for any of these stocks. For example, Apple's iPhone ecosystem and Amazon's e-commerce platform would almost certainly grow significantly throughout the rest of the decade, even without an AI boom.
But AI should provide a massive tailwind for all six top AI stocks. Amazon, Alphabet, and Microsoft stand to especially benefit because all three companies are major cloud services providers. The increased adoption of AI will almost certainly push more organizations to the cloud over the next seven years.
Nvidia should also continue to be a key beneficiary of the AI revolution. The company's graphics processing units (GPUs) remain the go-to option for running servers that power AI apps. Nvidia doesn't just have chips, though; it has a full-blown AI platform, including software, models, and services.
Meta could have an AI advantage that's hiding in plain sight. The company is open-sourcing its AI technology. CEO Mark Zuckerberg thinks this strategy will put Meta at the center of future AI development.
What about Apple, the seeming laggard in the AI race? CEO Tim Cook said in the tech-giant's latest quarterly conference call that the company will "continue weaving [AI] in our products on a very thoughtful basis."
What could get in the way
Lots of predictions ultimately don't come true, and mine could be one of them. There are several things that could potentially get in the way of these six AI stocks reaching a combined market cap of $20 trillion by 2030.
A severe and prolonged economic downturn ranks at the top of the list. All of these big companies would likely be negatively affected by a major recession, and their share prices would reflect that impact.
Significant AI advances might not come as quickly and easily as many expect. As a result, the scramble to use AI could slow instead of accelerate. This scenario would especially hurt the share price of Nvidia, which is arguably in bubble territory already.
We can't rule out the possibility that other companies will rise to the top of the AI world and disrupt the business models of the current tech giants. Bill Gates even thinks that forthcoming AI personal digital assistants could spell doom for Amazon's online shopping and Google Search. He believes there's a 50% chance that the disruptive technology will come from a start-up.
Still, I'm sticking with my prediction. I expect that these six AI stocks really will together be worth at least $20 trillion by 2030. I hope I'm right; I own all six stocks.
