Over the past two decades, major market indexes have undergone a technological shift. For example, in 2004, General Electric and Exxon Mobil The market capitalization reached US$319 billion and US$283 billion respectively.
Now, just 20 years later, a look back at the chart-topper helps illustrate the changing of the guard.tech giants apple and Microsoft Currently they are in the same class by themselves, Market value Each is worth $3 trillion (as of Thursday morning). A review of the top 10 further demonstrates the dominance of technology companies, as seven of the top 10 are industry-leading technology companies.
One of the biggest drivers of stock market gains over the past year or so has been advances in the field of artificial intelligence (AI). The potential for widespread productivity improvements is making waves, and accelerated adoption may drive the next wave of AI developments. “Three trillionaires.” There are two stocks that I believe will be driven by the growing demand for artificial intelligence and join this unique group over the next seven years or even sooner.
Nvidiaof (Nasdaq: NVDA) The current market cap is $1.54 trillion, so it could eventually join the $3 trillion club, although the exact timing is up for debate. The stock would need to rise about 95% from Wednesday’s closing price to hit that benchmark, which would equate to about a 10% increase each year between now and 2030, which is still possible.
That’s not to say there won’t be challenges along the way. One of the biggest headwinds may be the stock’s recent rally, with Nvidia up 239% in the last year alone. However, its importance in the field of artificial intelligence cannot be overstated. The company has seen triple-digit year-over-year growth in both revenue and profit over the past two quarters, and management expects more growth to come.
Nvidia serves multiple markets, each representing growth opportunities. Nvidia has long held a commanding lead in standalone desktop graphics processing units (GPUs), recently controlling more than 80% of the market.However, sales hit record highs during the pandemic and the subsequent downturn led to an industry-wide downturn, and now, after nearly three years of continuous decline, GPU shipments at last A rebound has begun, which should help push Nvidia higher.
But the combination of artificial intelligence and cloud computing can really Drive the company Reach new heights. Nvidia has established itself as the gold standard in artificial intelligence and the go-to choice for helping data move over the ether – but don’t take my word for it. The company has an estimated 95% GPU share. CFRA Research analyst Angelo Zino said the data center market is the foundation of cloud computing. Additionally, Nvidia is unmatched when it comes to processors for machine learning, an established approach used by many artificial intelligence tools. According to New Street Research estimates, Nvidia’s market share is 95%. It’s these credentials that make Nvidia a natural choice to accelerate generative AI.
Although estimates vary, it’s clear that trillions of dollars are involved.analyst Morgan Stanley It is suggested that generative AI represents a $6 trillion opportunity, while Goldman Sachs The market is estimated to be worth US$7 trillion. As the leading supplier of artificial intelligence processors, Nvidia is in a leading position.
Data center and cloud infrastructure providers are scrambling to increase the capacity of their systems to meet the computing demands of generative artificial intelligence. This trend is expected to continue for several years, providing Nvidia with the momentum it needs to join the $3 trillion club.
Amazon (NASDAQ: AMZN) With a current market capitalization of $1.63 trillion, many believe it is only a matter of time before the company enters the $3 trillion club. To hit that benchmark, the stock would only need to rise about 85% from Wednesday’s closing price. With annual growth of about 10% between now and 2030, this hurdle is well within Amazon’s reach.
There are many catalysts that could drive the company’s future growth. Decades of high inflation have led to people making tough choices to make ends meet, putting pressure on consumer spending, which in turn has hurt Amazon’s industry-leading online retail business. There are signs the economy is finally improving, Amazon E-commerce sales increased 11% in the first three quarters of 2023. Further improvement in the economic outlook could provide an additional boost.
Global e-commerce sales are expected to grow by more than 9% in 2024, exceeding US$6.3 trillion. As the world’s largest digital retailer, Amazon is well-positioned to ride the wave of e-commerce growth.
Another growth area for the company is digital transformation led by cloud computing. According to data provided by market analysis company Canalys, Amazon Web Services (AWS) is the global leader in cloud infrastructure services, accounting for 31% of the market share. Many businesses have scaled back cloud spending in the face of the economic downturn, but growth is returning. Cloud services spending grew by 16% in the third quarter of 2023, and is expected to accelerate further as economic conditions improve. As an industry leader, Amazon is preparing to benefit from this trend.
Perhaps Amazon’s biggest potential growth driver is generative artificial intelligence. The technology has proven effective at summarizing emails and drafting responses, searching for information on the Internet and company warehouses, and even writing and debugging computer code, with new use cases being discovered every day. The result is that people are adopting these AI models like crazy. However, the cost of creating these systems from scratch is prohibitive, as are the vast amounts of data required to train basic generative AI models.
Therefore, cloud providers including AWS are best suited to provide users with generative AI services. Amazon already offers dozens of such models and has launched a growing suite of tools to help its cloud customers benefit from AI.
A resurgent e-commerce market, a rebound in cloud spending and the growing adoption of artificial intelligence should give Amazon the boost it needs to join the $3 trillion club.
Should you invest $1,000 in Nvidia right now?
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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. Danny Weiner Holds positions at Amazon, Apple, Microsoft, and NVIDIA. The Motley Fool has positions and recommendations at Amazon, Apple, Goldman Sachs Group Inc., Microsoft and Nvidia. The Motley Fool has positions and recommendations at Amazon, Apple, Goldman Sachs Group Inc., Microsoft and Nvidia. disclosure policy.
2 Artificial Intelligence (AI) Growth Stocks Will Join Apple and Microsoft in the $3 Trillion Club by 2030 Originally published by The Motley Fool