The stock market has seen a lot of wobble and reshuffle since the beginning of last year. A surge in artificial intelligence (AI) has shed light on the huge potential of tech stocks, attracting investors and Nasdaq Composite by more than 60% since January 1, 2023.
Apple (NASDAQ: AAPL) secured its position as the world’s most valuable company by market capitalization in 2011 and consistently held that position until this year. The tech giant temporarily lost the top spot between January and June 2024 when Microsoft (NASDAQ: MSFT) surpassed Apple, and Nvidia (NASDAQ: NVDA) briefly reached a market cap of over $3 trillion.
But Apple’s $3.3 trillion market cap has once again made it the world’s most valuable company. Still, Microsoft and Nvidia remain hot on its heels and could overtake it for good in the coming years.
Microsoft’s diversified business model and increasingly established position in AI suggest it could have a more reliable position in technology. Meanwhile, Nvidia’s nearly unmatched dominance in the chip market appears to be the gift that keeps on giving as demand for graphics processing units (GPUs) continues to soar.
Below are two stocks that I predict will be worth more than Apple in five years.
1. Nvidia
Nvidia’s market cap was $360 billion at the beginning of 2023 and is now $2.6 trillion. This is an impressive growth spurt.
The company has consistently outpaced Apple in share growth over the past five years, with its share price surging 2,600% compared to the iPhone maker’s 330% rise. And that trend is unlikely to slow down anytime soon.
This chart shows the huge difference in financial growth that Nvidia and Apple have experienced over the past year. While these companies are both leaders in technology, their businesses are significantly different.
Nvidia is benefiting from the rising demand for chips, particularly its GPUs. These chips power many products, from cloud platforms to AI models, personal computers, game development engines and more. Meanwhile, Nvidia has achieved an estimated 70% to 95% market share in GPUs.
Technological advances are only likely to increase demand for powerful chips as companies improve their hardware and software offerings. By contrast, Apple has struggled to attract new customers for its products over the past year, with iPhone and Mac revenues down 10% and 8%, respectively.
Apple is expanding its AI footprint and will release a major software update this fall called Apple Intelligence. The update will overhaul its operating systems and introduce several generative features. The company hopes Apple Intelligence will convince millions of consumers to upgrade their devices, since the features will only be accessible with newer products. While the software could boost profits for the current fiscal year, it remains to be seen how Apple will benefit from AI in the long run.
Meanwhile, Nvidia continues to play a major role in the industry as a leading chipmaker, a position that will see it surpass Apple in market capitalization over the next five years.
2.Microsoft-
For years, Microsoft has played second fiddle to Apple on the list of most valuable companies. Apple has consistently outpaced the Windows company in share growth, with a 330% increase since 2019 compared to Microsoft’s 195%.
That trend has changed by 2024, however. Microsoft’s stock has risen 12% so far this year, while Apple’s has risen 8%. It’s not a huge difference, but Microsoft’s lead in AI and strength in software will likely ensure it continues to outpace its rivals.
The AI market is expected to grow at a compound annual growth rate of 37% through 2030, which would mean it would reach nearly $2 trillion in spending. Meanwhile, Microsoft’s diverse business model gives it multiple ways to monetize its AI products, thanks to its own brands like Windows, Office, Azure, Bing, Xbox and LinkedIn.
Since early 2023, the company has introduced generative features across its product lineup. This includes new productivity tools on Windows and its Office productivity suite, a refresh of Bing, and multiple AI solutions on its Azure cloud platform. Microsoft has also started to recoup some of its significant investment in AI, by signing new members to Azure and Microsoft 365. Their respective segments are expected to grow 12% and 20% year-over-year in 2024.
Like Nvidia, Microsoft is outperforming Apple in profit growth. Over the past three years, Microsoft’s quarterly revenue and operating income have grown much faster than Apple’s.
Microsoft became a giant in technology thanks to its success in software. The rise of AI has given it the opportunity to let its unique skills and product lineup shine. The company arguably has more growth potential in AI, which could allow it to overtake Apple in market value by the end of the decade.
Should You Invest $1,000 in Nvidia Now?
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Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Prediction: 2 Stocks That Will Be Worth More Than Apple in 5 Years was originally published by The Motley Fool
