If history demonstrates anything, it's that change is one of Wall Street's only constants. Looking back to the start of the century, only one of the 10 largest publicly traded companies by market cap is still among the top 10 by market cap today. Thanks to innovation, competitive advantages, collaborations, acquisitions, and competition, the market's largest and most influential companies are always in flux.
Since the U.S. economy naturally expands over time, seeing publicly traded companies eclipse the $1 trillion valuation mark should become more common. At the moment, there are five stocks with trillion-dollar-plus valuations. By 2035, I predict there will be at least 10 -- and neither electric-vehicle manufacturer Tesla (TSLA -1.11%) nor artificial intelligence (AI) chip producer Nvidia (NVDA 6.18%) will be among them.
Image source: Getty Images.
1. Apple: Current market cap of $3.05 trillion
Considering that it could lose two-thirds of its value and still be part of the trillion-dollar valuation club, it's a pretty good bet that tech stock Apple (AAPL -0.35%) isn't going anywhere.
Apple is consistently at or near the top of every list ranking brand value, and it has an incredibly loyal customer base that regularly snatches up its new products. If Apple can maintain its lead in the U.S. smartphone market, while continuing to build on its rapidly growing subscription services segment, it shouldn't have any trouble holding onto its spot as one of Wall Street's most influential businesses.
I'd be remiss if I didn't also mention that Apple has repurchased a jaw-dropping $586 billion worth of its common stock over the past 10 years.
2. Microsoft: Current market cap of $2.53 trillion
Another stock that looks like a no-brainer to maintain its existing trillion-dollar market cap is Microsoft (MSFT 1.82%). For those curious, Ole Softy is the aforementioned company from 2000 that's kept its spot among the 10 largest publicly traded companies by market cap.
Microsoft's secret sauce continues to be its blending of the old and the new. All eyes are on its AI ventures, as well as its fast-growing cloud infrastructure service Azure, which accounts for nearly a quarter of global cloud infrastructure service spending.
But don't forget that Microsoft is a cash cow that's continuing to reap the rewards of legacy software and solutions. While these segments (e.g., Windows) may not be growing much, if at all, these days, they still contribute plenty of cash flow that Microsoft can direct into higher-growth innovations or acquisitions.
3. Alphabet: Current market cap of $1.52 trillion
Alphabet (GOOGL 10.22%) (GOOG 9.96%), the parent company of internet search engine Google, streaming platform YouTube, and autonomous vehicle company Waymo, is also a good bet to retain its trillion-dollar market cap by 2035.
As of May 2023, Google accounted for 93.1% of global internet search share. Moreover, Google hasn't seen its share of worldwide search fall below 90% since the first quarter of 2015. This looks to be an insurmountable competitive edge for Alphabet that'll lead to significant ad-pricing power for the platform.
Alphabet's ancillary operations have plenty of momentum, too. For instance, Google Cloud has grown into the world's No. 3 cloud infrastructure service. More importantly, the segment produced its first quarterly profit in the March-ended quarter. It's on track to become a serious cash-flow driver for Alphabet.
4. Amazon: Current market cap of $1.34 trillion
E-commerce behemoth Amazon (AMZN 3.43%) is yet another current trillion-dollar member that should maintain its spot in this exclusive club by 2035.
Though most people are familiar with Amazon because of its world-leading online marketplace, what's really turning the wheel in terms of cash flow creation is Amazon Web Services (AWS). While Google Cloud and Azure are respectively No.'s 3 and 2 among cloud infrastructure service providers, AWS is No. 1 and accounts for just shy of a third of global cloud infrastructure service spending.
Additionally, Amazon's subscription services segment is making waves. Not only are its 200-million-plus Prime members buying more than the typical consumer, but the annual fees associated with Prime are a big lift to the company's operating margin.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
5. Berkshire Hathaway: Current market cap of $746 billion
Since billionaire Warren Buffett became CEO of Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%) 58 years ago, his company's Class A shares (BRK.A) have averaged a 19.8% annualized return. Even a fraction of that annualized return over the next 12 years would allow Berkshire's stock to surpass a $1 trillion valuation.
Berkshire Hathaway's success can primarily be attributed to Buffett's love of cyclical, dividend-paying companies. Since periods of economic expansion last substantially longer than recessions, Buffett has perfectly positioned Berkshire Hathaway's investment portfolio and owned assets to benefit from a naturally expanding U.S. economy.
Berkshire is also on track to collect north of $6 billion in dividend income this year. Companies that regularly pay a dividend are usually profitable on a recurring basis and time-tested.
6. Meta Platforms: Current market cap of $727 billion
Social media stock Meta Platforms (META 0.43%) was once a trillion-dollar company before falling from grace. But given its competitive advantages in the social media space, regaining this trillion-dollar plateau by 2035 seems likely.
In spite of all the competition Meta has dealt with, Facebook, Instagram, WhatsApp, and Facebook Messenger are still among the most-downloaded social media apps in the world. During the first quarter, Meta's family of apps lured more than 3.8 billion unique monthly visitors, which makes the company a clear go-to for advertisers wanting to target users.
Additionally, 12 years is a significant amount of time for Meta's investments in the metaverse and augmented/virtual reality to pay off.
7. Visa: Current market cap of $497 billion
Leading payment processor Visa (V -0.23%) has a good chance to more than double in value over the next 12 years and reach a $1 trillion market cap.
As of 2021, Visa controlled close to 53% of credit card network purchase volume in the U.S., the world's largest market for consumption, and it was the only one of the four major payment processors in the U.S. to gain meaningful market share following the Great Recession (2007-2009). Between the steady long-term expansion of the U.S. economy and the higher growth potential of emerging markets, Visa's growth runway is impressively long.
To boot, Visa solely focuses on payment facilitation and doesn't lend. Not having to set aside capital to cover loan losses during short-lived recessions is a key competitive advantage over most financial stocks.
8. UnitedHealth Group: Current market cap of $447 billion
Insurer and healthcare services provider UnitedHealth Group (UNH 0.30%) has a reasonable chance to become the first healthcare stock to top the $1 trillion valuation mark by 2035.
Although most people are familiar with UnitedHealth's insurance operations, what's really fueling this company's growth potential is its subsidiary, Optum. Optum has multiple operating segments that cover everything from pharmacy care services and care delivery to the software and systems hospitals and medical organizations use. Both the growth rate and operating margin for Optum tend to outpace the insurance segment.
A sustained low-double-digit earnings growth rate is possible for UnitedHealth Group over the coming 12 years.
9. Mastercard: Current market cap of $373 billion
Although payment facilitator Mastercard (MA 0.07%) trails Visa's market share in the U.S. by nearly 29 percentage points, there's plenty of room for multiple winners. That's why I have Mastercard joining its top competitor in the trillion-dollar club by 2035.
A sizable percentage of global transactions are still being conducted in cash. This should allow Mastercard ample time to organically expand its payment infrastructure into underbaked regions, such as the Middle East, Africa, and Southeastern Asia.
Like Visa, Mastercard has also avoided the temptation of becoming a lender. By keeping things conservative, management has ensured that the company won't be hit by loan losses or delinquencies during inevitable economic downturns.
10. PayPal Holdings: Current market cap of $74 billion
Last but not least, I have fintech giant PayPal Holdings (PYPL 2.90%) reaching a trillion-dollar valuation by 2035. To achieve this, PayPal shares would need to rise by about 1,250% over the next 12 years (assuming a static outstanding share count).
The big catalyst for PayPal is growing digital payment adoption. Even with U.S. gross domestic product declining during the first-half of 2022, and recessionary concerns persisting into 2023, total payment volume traversing PayPal's networks has maintained a low-double-digit growth rate, sans currency movements.
Perhaps even more important is that active account engagement is climbing. When 2020 came to a close, the average active account completed fewer than 41 transactions over the trailing 12 months (TTM). As of March 31, 2023, the average active account had completed more than 53 transactions over the TTM. This is excellent news for PayPal's predominantly usage-driven, fee-generating operating model.
