Apple was the first company to achieve a market capitalization of $1 trillion. It reached that milestone in 2018. Microsoft and Alphabet joined the club in 2019 and 2020, respectively, then Amazon and Nvidia followed in 2023. For the sake of accuracy, Amazon actually attained a $1 trillion market capitalization in 2020 -- it even approached $2 trillion in 2021 -- but its valuation dropped below $1 trillion in late 2022 as the business battled economic headwinds.
Here are two growth stocks that could join the $1 trillion club by 2033.
Tesla: $815 billion market capitalization
Tesla (TSLA +2.37%) currently has a market capitalization of $850 billion. That figure would need to increase at just 2% annually to reach $1 trillion by the end of the decade, but some experts expect the company to motor by that milestone much sooner. For instance, Trefis analysts value Tesla at $2 trillion by 2025, and Ark Invest says its valuation could exceed $4 trillion by 2027. Those estimates are built around two big opportunities: electric vehicles and autonomous vehicles.
NASDAQ: TSLA
Key Data Points
Tesla is the market leader in battery electric vehicle (BEV) sales and its manufacturing expertise is a material competitive advantage. Most notably, Tesla can produce battery packs (the most expensive part of an electric car) at a lower cost per kilowatt-hour than any peer. That helped it achieve the highest operating margin among volume carmakers last year, and the company will likely get more efficient in the future.
Tesla plans to introduce a new vehicle assembly system at Gigafactory Mexico in 2024. The system (referred to as the "unboxed process") could revolutionize auto manufacturing by cutting production costs in half and reducing the factory footprint by 40%. But management sees full self-driving (FSD) technology as the most important source of profitability in the future.
CEO Elon Musk says FSD software can be sold at close to 100% gross margin, and the FSD platform will power the robotaxis Tesla plans to mass produce in 2024. The company is also willing to license its software to other automakers. Those potential revenue streams represent a sizable opportunity. Precedence Research expects the autonomous vehicle market to grow at 39% annually to reach $1.8 trillion by 2030, outpacing the electric vehicle market, which is forecast to increase at 23% annually to reach $1.7 trillion by 2032.
Here is the case for a $1 trillion valuation: Shares currently trade at 10.9 times sales, slightly above the 10-year average of 9.4 times sales. If Tesla increases revenue at 30% annually over the next decade -- a reasonable estimate given its growth opportunities -- its market cap could hit $1 trillion at a valuation of 0.8 times sales. That multiple aligns closely with other automakers. Of course, Ark believes Tesla will branch into autonomous ride-hailing services, and a software and services company may warrant a much higher valuation multiple, meaning Tesla could be worth much more than $1 trillion by 2033.
Visa: $468 billion market capitalization
Visa (V 1.50%) currently has a market capitalization of $475 billion. That figure would need to grow at 7.9% annually to reach $1 trillion within a decade, and history says that can happen. Visa increased its market cap at 14.9% annually over the past decade, and the company has a durable competitive advantage that should keep it in growth mode for years to come.
Visa operates the largest payments network in the world as measured by volume. It also ranks as the most accepted payment card in the world (alongside Mastercard), with more than 100 million merchant locations. That ubiquity hints at a powerful network effect and immense brand authority. Sellers are essentially obligated to accept Visa to meet buyer expectations, and Visa is using the trust it cultivated in consumer payments to expand into adjacent areas, like business-to-business payments and open banking solutions.
NYSE: V
Key Data Points
Despite economic challenges, Visa reported solid financial results in the second quarter. Revenue increased 11% to $8 billion as payment volume (especially cross-border volume) and processed transactions continued to climb. On the bottom line, earnings under generally accepted accounting principles (GAAP) soared 20% to $2.03 per diluted share, outpacing top-line growth as the company repurchased $2.2 billion in stock.
Looking ahead, investors have reason to be bullish. Consumers (and businesses) are moving away from paper payments, and they are instead choosing payment cards, digital wallets, and other methods of transacting electronically. Given that impetus, Grand View Research says global digital payments revenue could increase at 21% annually through 2030, and few companies are better positioned to benefit than Visa.
Here's the case for a $1 trillion valuation by 2033: Shares currently trade at 15.2 times sales, roughly in line with the 10-year average of 15.5 times sales. If Visa grows revenue at 8% annually over the next decade -- a reasonable estimate given that revenue grew at 10.3% annually over the last decade -- its market capitalization would reach $1 trillion at a slightly cheaper valuation of 14.9 times sales.
