Twelve years ago, the four largest American companies by market capitalization were ExxonMobil, Apple (AAPL 1.65%), Microsoft (MSFT -0.12%), and Chevron. Since then, ExxonMobil and Chevron have fallen out of the top four -- out of the top 10, in fact -- and have been replaced by Alphabet and Amazon (AMZN -0.96%).
But what about 12 years from now? Should we expect the same four stocks to hold their spots, or will new names have elbowed their way to the top? Here's what I think.
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Microsoft
Twelve years from now, I predict Microsoft will be the largest American company by market cap. The software giant is already the country's second-largest company with an astounding market valuation of $2.4 trillion. What will take it from No. 2 to No. 1? In a word: Growth.
Microsoft has averaged quarterly year-over-year revenue growth of about 11% over the last decade. That's stunning for a company of its size. Moreover, recent advancements in artificial intelligence (AI) should mean even more revenue growth for Microsoft in the coming years as the company can leverage its existing relationship with OpenAI -- the company behind ChatGPT -- and potentially acquire promising start-ups before they become threats to it.
Lastly, Microsoft's diverse business segments give it a foothold in various fields: cloud, gaming, and social networking, to name a few. It all adds up to a tech juggernaut that should continue riding high in the next decade.
Amazon
Currently, Amazon sits in the No. 4 spot with a market cap of $1.3 trillion. However, I think the e-commerce giant will jump to No. 2 by 2035.
Like Microsoft, Amazon should get a boost from AI software and services. Amazon is already the top name in cloud computing thanks to its lucrative Amazon Web Services (AWS) segment. As more organizations and applications migrate to the cloud, Amazon should reap even more revenue from AWS.
In addition, Amazon is likely to gain ground as it continues to build out its AI offerings. The company already uses AI to help run its massive logistical network. But with an almost endless stream of user data gleaned from the more than 500 million Alexa-enabled devices globally, Amazon is well-positioned to develop the next generation of personalized, functional AI assistants.
Apple
I foresee Apple dropping into third place by 2035. Currently, it's the largest American company, with a market cap of $2.9 trillion.
There are, however, risks to being the top dog. After all, there's nowhere to go but down. At any rate, I don't expect Apple to go the way of ExxonMobil and drop out of the top four. But I do think Apple will grow more slowly than other companies (like Microsoft and Amazon) that are better positioned for the next 12 years.
For example, Apple's greatest asset is its ability to design, produce, and sell great hardware. However, with the rise of AI technology, it's possible hardware might take a back seat to software. After all, no one cares about what device they use when they ask ChatGPT a question -- the interest is in the interaction with the cloud-based chatbot.
At any rate, from a market perspective, Apple needs to reinvigorate its revenue growth, which has decelerated steadily since 2021. Last year, its quarterly year-over-year revenue growth averaged less than 1%, which is no recipe for holding on to the top spot.
New iPhone models, and the company's latest VR headset, should help drive up revenue in the short term. However, I see Apple slipping down the list in the long term as other, more software-oriented stocks leapfrog it.
Tesla
Finally, a dozen years from now, I expect to see Tesla (TSLA 2.29%) rounding out the top four. Today, the electric vehicle (EV) leader is No. 6 with a market cap of about $800 billion. However, by 2035, I think that its value could be much, much higher.
And I have two reasons why. First, as you might suspect, would be the transition to EVs. It's an enormous secular trend where Tesla holds numerous advantages over its competitors.
There is, however, a second reason to think Tesla could not only make it into the top four, but perhaps top the list by 2035: Elon Musk. In a nutshell, visionary leaders are hard to come by, and the man leading Tesla is one of them.
Musk is at the forefront of several key technological trends: clean energy, commercialization of space, autonomous driving, and social media, to name a few. There's no telling what he might be doing in 12 years, but it's almost certainly going to be interesting and profitable.
However, for investors, there's only one way to "bet" on Musk. Of his numerous companies and ventures, only Tesla is a publicly traded company. And it's the biggest reason Musk is the wealthiest individual on the planet.
Therefore, because of its visionary leadership, I wouldn't bet against Tesla taking the crown as the largest American company by 2035.
