Take a look at a list of the largest companies in the world by market capitalization, and you might notice a common thread across most of them: the group’s largest members have bet heavily on artificial intelligence (AI). And those bets appear to be paying off.
Currently, six AI stocks are worth more than $1 trillion. They could have company in the not too distant future. Here are the top six – and the two AI stocks most likely to join the club next.
The $1 trillion six-pack
Apple (NASDAQ: AAPL) And Microsoft (NASDAQ: MSFT) are in a tight race to become the largest company in the world. Both market caps hover around $3.3 trillion.
For a while, it seemed like Apple would be left in the dust in the race to develop AI technology. The Siri AI assistant almost seemed outdated compared to new major language models (LLMs).
However, Apple’s recent launch of new generative AI capabilities has changed the story. Some think the new Apple Intelligence features could even trigger an iPhone upgrade supercycle.
Microsoft has benefited greatly from its relationship with ChatGPT maker OpenAI. The tech giant’s cloud business has grown mainly thanks to a huge generative AI tailwind. The company’s introduction of AI-powered Copilot+ PCs should also provide a nice boost to operating system sales.
Nvidia (NASDAQ: NVDA) is hot on the heels of Apple and Microsoft with a market capitalization of approximately $3.2 trillion. The maker of graphics processing units (GPUs) has been the poster child of the AI boom over the past eighteen months. Nvidia’s upcoming rollout of its Blackwell GPU architecture could keep the company at the top of the AI chip market.
We could say that Google is older Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) And Amazon (NASDAQ: AMZN) are in the second tier of mega-cap AI stocks. Alphabet’s market cap is about $2.2 trillion, while Amazon’s is just under $2 trillion.
Both companies, like Microsoft, are cloud service providers. Generative AI could be the cloud’s strongest growth driver yet. Both Alphabet and Amazon use AI to increase sales in their key non-cloud businesses (search for Alphabet and e-commerce for Amazon). They also hope to be winners in self-driving car technology: Alphabet with its Waymo unit and Amazon with Zoox.
Metaplatforms (NASDAQ: META) lags behind the other AI leaders with a market cap of almost $1.3 trillion. The company uses AI extensively in its social media apps, including Facebook and Instagram. CEO Mark Zuckerberg predicted in late 2023 that AI-powered business messaging will be “the next major pillar” of his company.
Next in the club
Which AI companies are best positioned to join these six in the $1 trillion club? My votes go to Broadcom (NASDAQ:AVGO) And Taiwanese semiconductor manufacturing (NYSE: TSM).
Broadcom’s market capitalization is now almost $780 billion. The stock rose last week after the semiconductor manufacturer reported stellar second-quarter 2024 results. Revenue increased 43% year over year, mainly due to the acquisition of VMware and strong demand for its networking products in AI data centers.
The company also announced plans to conduct a 10-for-1 stock split on July 15. While this split won’t impact Broadcom’s underlying business, it could make the stock more attractive to retail investors.
Taiwan Semiconductor Manufacturing’s market capitalization of about $740 billion is not far behind Broadcom’s. The company makes chips for many of the top AI leaders, including Apple, Nvidia and Broadcom.
As the name suggests, the company is based in Taiwan. However, it expects to begin production at its first advanced chip manufacturing facility in Arizona next year. There is also a fantastic factory being built in that state, with plans for a third. These investments could cement the company’s status as the go-to chipmaker for the world’s top AI companies.
Are Broadcom and Taiwan Semiconductor smart choices?
While I predict that Broadcom and Taiwan Semiconductor will be the next AI stocks with a market cap of $1 trillion or more, I don’t know how long it will take for them to reach that threshold. But I think both are smart stocks to buy now for aggressive growth investors.
Income and value investors will likely want to look elsewhere. Neither stock is cheap. Although both pay dividends, their yields are only in the ballpark of 1.4% – not enough to entice many income investors.
However, if you’re looking for growth and don’t mind potential volatility, Broadcom and Taiwan Semiconductor Manufacturing could be good solutions. I expect both stocks to continue to beat the market in the coming years as AI adoption increases.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Keith Speights holds positions at Alphabet, Amazon, Apple, Meta Platforms and Microsoft. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
6 Artficial Intelligence (AI) Stocks Are Worth More Than $1 Trillion Here are the two most likely to join the club. was originally published by The Motley Fool
