In 2018, Apple became the first company to have a market capitalization above $1 trillion. Today, the company is valued at roughly $2.8 trillion, but it's not the only publicly traded company with a market cap that measures in the trillions. Microsoft, Alphabet, Amazon, and Nvidia are also members of the illustrious club.
The trillion-dollar club is undoubtedly exclusive, but there's a good chance that it will be welcoming some new members in the not-too-distant future -- and investors have opportunities to capitalize. Read on to see why two Fool.com contributors think that these companies will be the next to join the trillion-dollar ranks.
Tesla has been there before
Parkev Tatevosian: Interestingly, the stock I think will surpass the $1 trillion market capitalization milestone has been there before. At its peak, Tesla (TSLA 0.66%) boasted a market cap of over $1.2 trillion. Given Tesla's dominant position in the electric vehicle (EV) industry and the nearly worldwide governmental support of the growth of EVs, I think it's reasonable to say that Tesla will reach the $1 trillion milestone again.
TSLA Market Cap data by YCharts
Indeed, Tesla's sales have snowballed over the years. Between 2013 and 2022, Tesla's revenue exploded from $2 billion to $81 billion. Legacy automakers were slow to react to Tesla's expansion, which gave it ample runway to capture a leadership position in the new market. That could be understandable, given automakers' profits from legacy models; they didn't want to cannibalize their own business.
Perhaps more impressively, Tesla's growth in sales has led to exponential increases in profitability. During the same years mentioned earlier, Tesla's operating income went from a loss of $61 million to a profit of $13.8 billion.
Several automakers are vying for market share in the EV industry, but few are generating anywhere near the level of income that Tesla is demonstrating. Given its excellent operating performance and the tailwinds in the industry it serves, it seems only a matter of time before Tesla again eclipses the $1 trillion market-cap level.
Meta Platforms can bounce back above $1 trillion
Keith Noonan: Like Tesla, Meta Platforms (META 2.33%) was formerly a member of the trillion-dollar market-cap club. In June 2021, Meta crossed the $1 trillion threshold for the first time, but the social media giant didn't hold on to its status for long.
In addition to macroeconomic pressures, changes that Apple made to data tracking on its mobile operating system sent shockwaves through the digital advertising industry and hurt Meta's business. This happened at the same time that CEO Mark Zuckerberg's company was making big investments in the metaverse.
The combination of pressures hitting its core business and a big investment in a potential long-term growth driver that had yet to yield much revenue caused Meta's earnings and stock price to tumble. In October 2022, the company's market capitalization briefly fell below the $250 billion mark. But Meta has come roaring back.
In order to improve business performance in 2023, the social media leader implemented broad cost-cutting measures. The initiative was dubbed the "year of efficiency," and the improving margins also coincided with a return to much stronger sales growth. Along with excitement surrounding the company's opportunities in artificial intelligence, these factors have helped its share price climb 161.5% this year.
Meta Platforms' market capitalization has now been pushed back up to $810 billion, and it ranks as the world's seventh-largest company. Given its current valuation, recent business performance, and remaining growth opportunities, it's reasonable to expect that the social media giant will be one of the next companies to cross the trillion-dollar threshold.
Tesla and Meta are growth stocks with long-term potential
Tesla and Meta Platforms are both leaders in their respective industries. Even though each company already has a large valuation, each of these industry leaders has already been valued above $1 trillion and could feasibly climb above that level over the next year if market conditions remain broadly bullish.
At current valuation levels, climbing to market capitalizations of $1 trillion would mean a roughly 25% return for investors who bought the stocks at today's prices. But there are good reasons to think that Tesla and Meta Platforms can deliver even better returns over the long term.
