It wasn't all that long ago that investors wondered which stock would be the first to reach a market cap of $1 trillion. Today, seven stocks have market caps of at least $1 trillion, with a couple more knocking on the door.
But the bar has been raised. A $1 trillion market cap is ho-hum now. Which stock will be Wall Street's first $5 trillion stock? Here's my prediction.
Several worthy contenders
I think there are several worthy contenders to become the first member of the $5 trillion club. And they share a common denominator: leadership in artificial intelligence (AI).
Microsoft emerged as an AI superstar after teaming up with ChatGPT creator OpenAI. The tech giant could have a clear path to reaching a $5 trillion market cap if organizations continue flocking to the cloud to build and deploy generative AI applications.
No company has dominated the AI scene like Nvidia, though. The demand for Nvidia's graphics processing units (GPUs) has been jaw-dropping, as customers bought them hand over fist to power their AI models. Don't let the recent pullback for this stock fool you: Nvidia could soon return to its winning ways.
Some might view Google parent Alphabet as an underdog in the race to $5 trillion. Antitrust regulators are going after the company for its market dominance in digital advertising. However, I wouldn't underestimate Alphabet. It's been an AI pioneer for years and has an especially big growth opportunity with its Waymo self-driving car unit.
And I wouldn't be surprised if Amazon is one of the first to crack the $5 trillion level. Like Microsoft and Google, it's a leader in cloud services (actually, Amazon Web Services is the top market leader in this space). The company is also continually expanding into new arenas, with its planned launch of a satellite internet business the latest example.
My $5 trillion pick
However, as much as I like Microsoft, Nvidia, Alphabet, and Amazon, I don't think any of them will be the first to attain a market cap of $5 trillion. Instead, I predict Apple (AAPL +2.08%) will get there first.
NASDAQ: AAPL
Key Data Points
It certainly helps that Apple has a head start over the other contenders. The company's market cap already tops $3.3 trillion. If Apple's share price increases by a compound annual growth rate of 9% over the next five years, it will blow past the $5 trillion level.
You'll sometimes hear that in football, the best offense is a strong defense. I think that can be true in business, too. Apple has an exceptionally strong "defense" with its highly loyal customer base and sticky ecosystem of products and services. This should help keep the company's market cap from sliding lower and allow innovations to drive growth.
What innovations from Apple are on the way? The most obvious one is Apple Intelligence, the company's first generative AI functionality. Some Wall Street analysts believe that the upcoming launch of Apple Intelligence will ignite a new iPhone upgrade super cycle.
I think we'll see more from Apple on the augmented reality front, too -- and not just with its Apple Vision mixed-reality headsets. Also, 6G wireless networks could be available by 2030, enabling cool new capabilities such as viewing holographic images on your iPhones. Just the anticipation of this could push Apple above the $5 trillion market later this decade.
I could be wrong
I'll be the first to admit that my prediction could be dead wrong. Maybe I'm counting too heavily on Apple's innovations to fuel growth. However, I suspect if I am wrong about Apple becoming the first $5 trillion stock, it will be because one of the other stocks I mentioned reaches the level sooner.
It's easy for me to envision many scenarios where another stock beats Apple to a $5 trillion market cap. Perhaps artificial general intelligence (AGI) is achieved, with Nvidia's GPUs becoming more critical than they are now. A major breakthrough in quantum computing could be made by Alphabet, Amazon, or Microsoft. Some other development could come out of left field from a company I haven't mentioned that is a head-spinning game changer.
However, based on how things stand right now, I think Apple has the best shot at reaching a market cap of $5 trillion first. Even if I'm wrong, the stock should be a solid winner for investors over the next decade and beyond.
