Alphabet is one of the world's largest companies. With a market cap of $2 trillion, there are only a handful of stocks that can compete with its size.
However, there are companies that could grow even larger than Alphabet within the next five years. Here, I'll cover two that could pull off that feat: Meta Platforms (META -1.70%) and Amazon (AMZN -0.68%).
Image source: Getty Images.
1. Meta Platforms
As of this writing, Meta Platforms' market cap stands at about $1.5 trillion. That trails Alphabet by a little more than $500 billion.
Yet while Meta is only 75% the size of Alphabet, I think it could overtake its rival in the very near future. Here's why.
First, Meta is enormous. The company can claim nearly 3.3 billion daily active users (DAUs) across its platforms, which include Facebook and Instagram. That means more than a third of the global population uses Meta's platform regularly.
Accordingly, given the size of its user base, the company reaps an enormous windfall in terms of ad revenue. In its most recently reported quarter, Meta tallied $38.3 billion in ad revenue. That works out to about $425 million per day.
True, Alphabet makes even more in ad revenue right now, but it's facing some challenges in its key category of internet search. That's to say nothing of the recent federal antitrust ruling that labeled the company a monopoly.
In short, Meta's bread and butter is ad revenue, and it's an area that is not only highly lucrative -- Meta's operating margin is a stout 38% -- it's growing like a weed. The company's overall revenue grew by 22% in its most recent quarter, despite its size.
In other words, Meta has plenty of gas in the tank to catch Alphabet by 2029 -- if not sooner.
2. Amazon
If Meta still has a sizable gap to overtake Alphabet, Amazon has only a tiny crack. As of this writing, Amazon's market cap of $1.9 trillion trails Alphabet's market cap by about $100 billion, or roughly 5%.
Indeed, during the past 10 years, these two companies have traded places several times, with Alphabet holding a steady lead from 2014-2018. Amazon edged ahead from 2018-2022, only to see Alphabet retake the lead in recent years.
However, I think Amazon will not only retake the lead, but move significantly ahead of Alphabet during the next five years. The main reason why is that Amazon is starting to hit its stride under Chief Executive Officer Andy Jassy, who took over from Jeff Bezos in 2021.
Three years into the job, Jassy is putting his own mark on Amazon, starting with the company's increased efficiency. As of its most recently reported quarter, Amazon's operating margin climbed to almost 10%. That's up significantly from its recent low of 1.8%, hit about one year after Jassy took over from Bezos.
AMZN Operating Margin (Quarterly) data by YCharts
Two companies to watch
Both Amazon and Meta Platforms are gaining ground on Alphabet's giant market cap. While I believe all three stocks remain solid long-term buy-and-hold candidates, investors may want to focus on Amazon and Meta, as those companies appear better positioned than Alphabet over the next few years.
