In theory, the size of a company's market capitalization shouldn't matter. Growth is all relative. So are investors' gains.
In reality, however, joining the trillion-dollar market cap club has been something of a badge of honor since Apple first achieved the feat back in 2018. It's also been bullish, with the market seemingly helping push more companies to that mark, and then viewing them in a different light once they've gotten there. It is a boon to a corporation's status and stature.
With that as the backdrop, here's a rundown of three high-growth stocks that could reach market capitalizations of $1 trillion within the next decade. They may even reach that target much sooner than 2034. This prospective market cap growth, of course, translates into opportunity for interested investors.
Advanced Micro Devices
Folks familiar with the hardware sliver of the technology sector probably know Nvidia's been the centerpiece of several of the industry's evolutions. Its GeForce 256 graphics card released in 1999 arguably marks the beginning of home computers serving as high-powered media devices. Nvidia's graphics processing units (GPUs) were heavily used in mining cryptocurrencies when doing so was all the rage several years ago. Now, Nvidia's tech dominates the artificial hardware computing market.
There's been a second-place contender following in Nvidia's footsteps for most of this time though, and while it's been a distant-second, it's still a name worth adding to your watchlist if not your portfolio. That company? Advanced Micro Devices (AMD 2.37%).
Truly, it's no Nvidia -- by several different measures. Its GPU market is regularly a fraction of Nvidia's, for instance, while its current market cap of $275 billion is only one-fifth of Nvidia's. Its much bigger rival has been able to hold its lead largely because it's, well, bigger -- and that allows it to fund more research and development.
The underpinnings of Nvidia's most recent growth are finally starting to favor Advanced Micro Devices as well, however. Namely, AMD is now making high-performance, purpose-built artificial intelligence processors. Facebook parent Meta Platforms and Microsoft, for example, have selected its new MI300X silicon as a cost-effective alternative to power their latest AI efforts.
Advanced Micro Devices' Ryzen 8040 chip also turns ordinary laptops into self-contained AI-capable devices. And these are just a couple of examples of how AMD is finally a serious contender in the artificial intelligence market.
It matters simply because this market still has such a long and steep growth runway ahead. Precedence Research estimates the annual AI hardware market alone will swell from around $600 million now to nearly $2.6 trillion by 2032. Even capturing less than its fair share of this growth could drive AMD shares much, much higher from where they're trading now.
Visa
You've almost certainly heard of Visa (V -0.23%). It's the world's biggest credit card middleman, processing more than 270 billion transactions every year worth a sum total of around $15 trillion. Over 4 billion cardholders can use their Visa cards at more than 130 million places peppered across the planet. In other words, it's pretty much everywhere.
Simply being everywhere alone, however, isn't necessarily enough to push the underlying company's market cap to $1 trillion. What's going to make that happen here is Visa's unwavering forward progress. With the exception of the advent of the pandemic in 2020, Visa hasn't failed to produce year-over-year profit growth in any quarter since 2010, just a couple of years after it went public. Profit growth has been almost as reliable. That's impressive to be sure.
V Revenue (TTM) data by YCharts
How? This persistent growth reflect the way Visa and its peers have turned card-based spending into a top payment choice, and even a lifestyle choice. Think about it. Older investors may recall a time when credit cards were only used for the occasional big-ticket purchase. Now they're used to facilitate the purchases of everyday things as simple as a cup of coffee, lunch, or the regular splurge at Amazon.com.
Look at the numbers. As recently as 10 years ago, cash was used to make 40% of U.S. consumer purchases, according to the Federal Reserve, while credit and debit cards were used a similar 42% of the time. Now cash takes care of only 17% of payments within the United States, while cards facilitate 60% of purchases.
We're seeing similar trends overseas as well. All of them favor Visa, which of course keeps a few cents' worth of each of these transaction's value. Cards are just too convenient to utilize these days, leaving the remainder of commerce up for grabs. And that's still a lot of remaining commerce. Ever-rising prices will help boost growth too.
Granted, with its current market capitalization of over $500 billion, Visa is already more than halfway to the trillion-dollar mark. Given its tailwind though, there's little reason to think it won't get there in a decade or less.
PDD Holdings
Last but not least, add PDD Holdings (PDD 2.80%) to your list of high-growth stocks that could become $1 trillion powerhouses within the coming 10 years.
You may be more familiar with this organization than you realize. This is the company behind Temu, the international version of China's e-commerce platform Pinduoduo. It was conceived as a means of connecting China's produce farmers (yes, fruits and vegetables) directly with consumers. As it turns out, though, the tech and premise work well for a variety of products in a variety of settings.
Some even argue that it's redefining, even disrupting, the online retailing business by bypassing wholesaling and giving manufacturers direct access to shoppers. More important, the model is working. PDD's third-quarter revenue was up a hefty 94% year over year, driving operating profit up 60%. Those numbers not only extend lengthening growth trends but accelerate them.
And the analyst community predicts comparable growth. Last year's projected top line of $33 billion is expected to be three times bigger within the next five years. Within 10 years, when Temu and Pinduoduo are everything they could be, this organization's revenue could twice be tripled.
Of the three stocks in question, this one's the furthest from reaching a $1 trillion market. Even with last year's heroic run-up, this company's still only worth a little less than $200 billion. It's got a long way to go. Of the three stocks in question, however, PDD is also the fastest growing, and likely to remain so for the foreseeable future. Its above-average risk is paired with an above-average potential for reward.
