These five artificial intelligence (AI) stocks will be worth a combined $25 trillion by 2030

Is the hype justified? That’s a question investors should always ask about anything that gets a lot of attention.

In some cases the hype fades away; I’m thinking of 3D printing. In other cases, however, early hype is more than justified. For example, the enormous market that has built up around the Internet has shown that many early proponents were right.

I think artificial intelligence (AI) belongs in the latter category. In my opinion, the tremendous success of several AI leaders is just the beginning. It is impossible to know what the future holds. However, I predict that by 2030, five AI stocks will be worth a combined $25 trillion – maybe even more.

AI’s fantastic five

By market capitalization, the five largest companies in the world have one important thing in common: they are all investing heavily in AI. Not only that, their respective AI strategies have played a key role in their big wins in recent years. Below are AI’s “fantastic five”:

Data source: Google Finance. *Market capitalizations as of May 30, 2024.

Earlier this year, Microsoft overtook Apple to take the number 1 position based on market capitalization. The company’s partnership with ChatGPT maker OpenAI has undoubtedly been the key factor behind Microsoft’s remarkable rise. The tech giant has integrated GPT-4 across its entire product range. Microsoft especially benefits from its relationship with OpenAI in its cloud business.

Apple has delivered a strong performance in the first half of 2023. Since then, however, it has lagged far behind the other largest AI stocks. Some investors worry that Apple is falling behind in the generative AI race. The company’s growth has also slowed significantly, largely due to saturation in the smartphone market. Yet Apple remains in a fierce battle with Microsoft for the largest market capitalization.

Nvidia is without a doubt the brightest star in the AI ​​universe right now. Demand for graphics processing units (GPUs) continues to skyrocket. Every other company in the top five (plus many more) is an Nvidia customer. Most of them would love to buy as many GPUs as they could get their hands on. Thanks to this huge demand, Nvidia’s shares have skyrocketed.

Alphabet seemed surprised by the successful launch of OpenAI’s ChatGPT. However, it didn’t take long for the company to launch its own generative AI products. Despite some PR issues, Alphabet remains in the thick of the AI ​​race with its Gemini AI models and Google Cloud AI offerings.

The story continues

Like Alphabet, Amazon quickly introduced multiple generative AI products after ChatGPT took the world by storm. Amazon’s AI initiatives have helped push its stock price much higher. The company’s focus on profitability has also been a crucial factor, with profits more than tripling year over year in the first quarter of 2024.

The Road to $25 Trillion

The combined market cap of these five AI stocks currently stands at just over $12.7 trillion. How can they together nearly double that amount to reach $25 trillion by the end of 2030? I think there are three important conditions.

1. Organizations are rapidly migrating to the cloud to take advantage of AI’s tremendous return on investment

Importantly, AI should deliver a huge return on investment (ROI) to companies. I expect this will be the case. If so, organizations around the world will almost certainly quickly migrate their apps and data to the cloud to harness the power of AI.

Amazon CEO Andy Jassy estimates that at least 85% of global IT spending remains on-premises, with the rest happening in the cloud. AI could go a long way toward turning these numbers around by the end of this decade.

This migration would directly benefit Amazon, Microsoft and Alphabet’s Google Cloud as they are the largest cloud service providers. It should also help Nvidia as the top source of chips for AI servers.

2. AI computing technology continues to improve at a rapid pace

It is critical for Nvidia that AI computing technology, especially chips, continue to improve at a breakneck pace – and that the company stays ahead of the curve. Nvidia’s new Blackwell GPU platform, launching later this year, should help make this happen. CEO Jensen Huang said in the company’s Q1 call that “other Blackwells are coming.”

3. Edge AI will be a huge new market

The first two requirements should ensure continued success for Microsoft, Alphabet, Nvidia and Amazon. But what about Apple? The tech giant needs edge AI to become a huge new market. Edge AI makes it possible to run AI on mobile devices. Since Apple has more than 2 billion active devices worldwide, it should have the lead to lead the edge AI market.

Possible problems and pleasant surprises

What could go wrong for these five AI stocks to reach a combined market cap of $25 trillion by 2030? A lot of. On the one hand, an economic recession could cause technology spending to decline. AI may not deliver the ROI that companies hope to achieve. The “hallucinations” and other issues with generative AI may remain problematic.

On the other hand, there could be some pleasant surprises in the coming years. One possibility is a major breakthrough in artificial general intelligence (AI). Perhaps AI’s computing power could even increase faster than anyone expects.

Whatever happens, I think the hype about AI is justified. And I won’t be shocked if my prediction turns out to be too pessimistic.

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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. Keith Speights has positions at Alphabet, Amazon, Apple and Microsoft. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool 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.

Prediction: These 5 Artificial Intelligence (AI) Stocks Will Be Worth a Collective Worth of $25 Trillion by 2030 Originally published by The Motley Fool