A surprisingly resilient economy and a lucrative artificial intelligence boom are pushing big U.S. tech giants toward a milestone that seemed impossible just a few decades ago. The market values of Nvidia, Microsoft, and Apple have all exceeded the US$3 trillion mark, followed closely by Google and Amazon, with market values in the US$2 trillion range.
The combined market value of these five technology giants alone exceeds $14.5 trillion, accounting for approximately 32% of the S&P 500 Index. According to Siblis research data. The performance of big tech companies this year has been particularly impressive, with Nvidia’s market cap soaring from $2 trillion to $3 trillion in less than 100 days.
Which begs the question: Which tech giant will reach the next big milestone first, a $4 trillion market capitalization? Some bears believe Big Tech’s record performance cannot continue forever given its rising valuations and a slowing economy, while bulls believe it’s just an AI-induced streak of Big Tech losses. The beginning of victory.
“I think a year from now, we’ll [will] Wedbush technology analyst Dan Ives said that there are three companies with a market value of US$4 trillion: Nvidia, Apple, and Microsoft. wealth.
He believes that many of his peers on Wall Street still underestimate the health of the artificial intelligence revolution and the U.S. economy. “You can’t spot a recession unless you have a telescope. What about the Fed? Their next step is to cut rates, not raise them. So, to me, all signs are bullish,” he said. “It’s 9pm and the party goes on until 4am… Haters are going to hate them and keep saying this is a bubble.”
Nvidia
Of course, there are varying opinions on where the big tech companies are headed, but many experts believe chip giant Nvidia will be the first to hit the $4 trillion market cap mark due to what seems like forever interest in its artificial intelligence. Endless desire.
“The first person to get there was probably the godfather of AI Jensen [Huang] And Nvidia, because they’re the only gaming in town — their GPUs are the new oil or gold in tech and there’s no real competition,” Ives said.
Nvidia shares have soared about 160% so far this year and have soared more than 3,000% over the past five years. This has led some analysts to warn that the tech giant’s valuation is already too high and does not take into account increased competition in the semiconductor market.
As David Trainer, founder and CEO of research firm New Constructs, puts it wealthShawn Tully (Shawn Tully) said last month: “Nvidia’s valuation is ridiculous. It faces the same curse as Tesla. But when Tesla made profits, a large number of competitors entered the electric vehicle field, The same thing will happen to Nvidia, cutting into profits and slowing sales.
But Ives noted that even as Nvidia’s stock price surged, so did its revenue and earnings. In the quarter ended in April this year, Nvidia’s revenue reached a record $26 billion and net profit reached a record $14.8 billion. In the same quarter of 2021, the company’s revenue was only $5.8 billion and net profit was $1.9 billion.
Louis Navellier, founder and chairman of the family office Navellier & Associates, also dismissed the competition argument, claiming that Nvidia essentially has a “monopoly” on key artificial intelligence chips, which will lead to several Continued growth in annual sales and profits. “And, you know, Jensen is kind of like the new Elon, he has a cult status,” he said, adding that this will continue to drive retail investors to buy the stock.
As of July 5, Nvidia’s market capitalization: $3.14 trillion
Microsoft
Microsoft’s booming cloud business and a huge investment in OpenAI, the creator of ChatGPT, have boosted its stock price over the past few years. But Tim Pagliara, founder and chief investment officer of independent wealth management company CapWealth, said it is the company’s diversified and sustainable revenue sources that will bring its market value to $4 trillion.
He said Nvidia may briefly hit the $4 trillion milestone first due to what he called the current “mania” for artificial intelligence, but Microsoft would become a “more sustainable” $4 trillion company.
“They are embracing artificial intelligence, but they also have a ton of things in the pipeline. I know as a small business owner we would love to continue to pay more per user per month to buy from Azure to them for security Some additional add-ons and so on that are created for the sake of flexibility,” he added, referring to Microsoft’s Azure cloud computing business.
Pagliara believes Microsoft’s big tech rivals also have riskier business models. He said Apple relies on consumers buying new iPhone products every few years, while Nvidia benefits from a lack of competition in the short term. At the same time, Microsoft has multiple ways to achieve continued revenue growth, from Azure cloud business and Office 365 to Windows and Linkedin.
Market cap: $3.48 trillion
apple
When it comes to long-term prospects, Apple is high on many analysts’ lists because of its potential to use artificial intelligence to let customers upgrade their existing phones and attract more iPhone customers. It may not be the first company to reach a $4 trillion market cap, but it will get there soon, these bulls say.
“I think in the next two or three years we’re going to see the largest market cap company being Apple because they have 2.2 billion iOS devices,” Ives predicted. “Consumer AI will break through the walls of Cupertino—they’re just at the beginning of an AI-driven supercycle.”
Louis Navellier is also optimistic about Apple’s future, but he said some “small breakthroughs” are needed to attract more customers to buy new iPhones.
He cited new artificial intelligence tools and the potential of the folding iPhone as examples. “I don’t know if they’re going to announce it in September, but if they do, it’s going to be a $2,500 phone that’s going to sell like crazy and send the stock price skyrocketing.”
Market cap: $3.46 trillion
What about Alphabet and Amazon?
The current market value of Google’s parent company is US$2.36 trillion, which is still far from the US$4 trillion mark. Analysts say Alphabet will be able to capitalize on the artificial intelligence revolution, but its hallucinatory missteps have left it lagging and its cloud business is underperforming other companies. However, recent reports suggest the search giant is poaching talent from its peers in an attempt to catch up.
The situation is similar for Amazon, which recently passed the $2 trillion milestone, and experts expect it will be some time before the stock price nearly doubles. Wedbush’s Ives believes Amazon’s cloud business, AWS, is also losing out to Microsoft. “I think it’s a bit arrogant to underestimate what Nadella and Microsoft are doing, and it’s a big blow to Amazon in the face of cross-town rivals and the 2-0-6 area code,” he said.
The veteran technology analyst said Amazon is also “behind the eight ball” when it comes to artificial intelligence. However, Ives noted that Amazon should benefit more from advances in artificial intelligence given the changes CEO Andy Jassy has made to the company’s cloud business and its large customer base.
To be sure, every tech giant on this list also faces risks. Antitrust regulations, cyberattacks, economic slowdowns, and reduced spending on artificial intelligence should all be taken into consideration. But for now, bulls remain bullish — and they think you should be too.
“The tech bears, with their spreadsheets and valuations, will remain in hibernation mode,” Ives said. “But when everyone gets together for breakfast at 6 a.m. after the AI party. Bulls [will have] Win, Bear sounds smart.
