It's no secret anymore. Artificial intelligence (AI) is driving the highest gains in the market, and several of the largest companies in the world today by market cap are only there because of AI. In fact, the five most valuable companies in the world are all making major inroads into AI, and the only one in the top 10 that's not is oil company Saudi Aramco.
If you're still on the sidelines, you might want to choose at least one AI-driven stock to add to your portfolio. They're not all the risky upstarts you might be imagining. In fact, this list only includes well-established industry giants that mostly have other businesses as well. That gives investors stability in their stock picks as well as exposure to the driving force behind the market's gains today.
The top five, and the top 10
The largest companies in the world today by market cap are:
- Apple (AAPL 1.93%)
- Nvidia (NVDA 1.53%)
- Microsoft (MSFT 0.73%)
- Alphabet (GOOG 1.69%)
- Amazon (AMZN 1.52%)
- Saudi Aramco
- Meta Platforms
- Tesla
- Broadcom
- Taiwan Semiconductor Manufacturing
Nearly all of these companies are making strides in developing an AI business. Apple is developing Apple Intelligence, providing its millions of users through its ecosystem with high-level consumer AI services included in its software. Nvidia has up to 95% of the global market for graphics processing units (GPUs), the chips that drive generative AI. Microsoft and Amazon both offer groundbreaking generative AI solutions to cloud computing clients, and Alphabet is turning its Google search service, which has 90% of the overall search market, into an AI-powered solution. That's the future of internet searching.
As for the last four, Meta and Tesla are both using AI as part of their businesses, rather than creating AI solutions. For example, Meta is using AI as part of its virtual reality business, and Tesla uses AI to power much of the technology it uses in electric vehicles. Broadcom is a major player in the infrastructure that makes AI work, and Taiwan Semiconductor manufactures much of the world's GPUs and other chips.
Here's a visual representation of the top 10 stocks and their recent market cap developments.
AMZN Market Cap data by YCharts
What about other big companies?
What I find fascinating is that as you move past the top 10, the next 10 are almost entirely non-AI companies. On this level, the list consists of:
- Berkshire Hathaway
- Eli Lilly
- Walmart
- JPMorgan Chase
- Visa
- Tencent
- Mastercard
- ExxonMobil
- United HealthGroup
- Oracle
Why investors should pay attention
It's important to note that the combined market cap of the second tier is about $6 trillion, less than a third of the top tier, which has a combined market cap of more than $19 trillion. The first group isn't just bigger; it's much bigger. And I'll go out on a limb to say that the gap is going to widen this year.
Image source: Getty Images.
The AI opportunity is simply enormous, and even with the combined tailwinds of moderating inflation and lower interest rates, financial and retail stocks won't be able to catch it. The AI market is expected to increase at a compound annual growth rate (CAGR) of 27.67% through 2030 according to Statista, and the AI stocks on this list are going to be some of the main beneficiaries.
I'll end with a cautionary note that while investors should definitely pay attention and invest in AI responsibly, they shouldn't put all of their savings into AI stocks. It's at least as important to reduce your risk through diversification, and if you own some solid, reliable value stocks, you can be more confident about putting your growth dollars to work for you with AI stocks.
