If there’s one constant on Wall Street that every investor should be aware of, it’s change. History shows that Wall Street’s largest companies by market capitalization are constantly reshuffled over time.
In 2000, branded companies loved Nokia, IntelAnd General Electric were among the top 10 listed companies in terms of market capitalization. Today, only one of these top 10 companies from 2000 is still among the largest in the world (I’ll come back to this company later).
No one has a crystal ball that can predict the future on Wall Street with 100% accuracy. But that doesn’t stop investors from making educated guesses about the future, and that’s what I’m going to do now.
While technological innovations, mergers, acquisitions, spin-offs and economic events can be extremely difficult to predict when looking years into the future, I believe the next five stocks will be the largest billion-dollar companies by 2035 – and Artificial Intelligence (AI) Titan Nvidiawho may be in a giant bubble will not be among them!
1. Amazon
My expectation is that by 2035 the e-commerce juggernaut will be big Amazon (NASDAQ: AMZN) will comfortably be the largest publicly traded company in the US
The fuel that should help Amazon take the crown as Wall Street’s top dog by market cap is its cloud infrastructure services platform Amazon Web Services (AWS). Spending on enterprise cloud services is still in the early stages of its growth, yet AWS already has $100 billion in annual run-rate sales and has captured a 31% share of global cloud infrastructure services spending, according to Canalys, as of end 2023. Cloud services margins are blowing margins in online retail sales. As AWS grows, Amazon’s operating cash flow can grow by a substantial faster than total sales.
Amazon’s subscription services and advertising services segments should also hold their own. The company surpassed 200 million Prime subscribers three years ago and has since added exclusive rights Thursday night football and expanded the content library. The exceptional pricing power that comes with Prime should significantly boost sales and cash flow from this segment.
Meanwhile, Amazon attracts nearly 2.5 billion people to its site every month, which equates to strong ad pricing.
I expect Amazon’s cash flow to push its valuation to well over $5 trillion over the next eleven years.
2.Microsoft
Remember the one stock I mentioned earlier that is the sole remnant of the 10 largest companies by market cap in 2000? It’s a software giant Microsoft (NASDAQ: MSFT). I expect this cash cow of a company to maintain its place in the top five for the next decade.
Microsoft’s not-so-subtle secret to success is its uncanny ability to combine the old with the new. For example, Windows may not be the growth segment it was 25 years ago, but it remains the undisputed global operating system in terms of market share. Microsoft continues to generate huge amounts of cash flow from legacy segments like Windows and Office and uses this money to reinvest in higher growth initiatives and acquisitions.
Nothing has been more important to Microsoft this decade than its ties to the cloud service. Azure is the second largest cloud infrastructure service platform behind AWS, with constant currency revenue growth of approximately 30% in recent quarters. The business integration of cloud-related services across product suites can support double-digit profit growth.
Moreover, Microsoft is swimming in money. It ended March with $80 billion in cash, cash equivalents and short-term investments, and has generated a staggering $110 billion in operating cash flow over the past twelve months. Microsoft has ample capital to take risks in the field of acquisitions and groundbreaking innovations.
3. Alphabet
The third largest share of a trillion dollars in 2035, based on my prediction, will Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG)the parent company of internet search engine Google, streaming platform YouTube and global #3 cloud infrastructure service platform Google Cloud.
Time is certainly something that will work in Alphabet’s favor. Over the past nine years, Google has been responsible for a whopping 90% of the global monthly Internet search share. Since Google is unlikely to relinquish its monopoly-like share of search results, this should ensure that Alphabet’s ad-driven business can benefit from extended periods of economic expansion. Although recessions are a normal and inevitable part of the economic cycle, no recession has lasted longer than eighteen months since the end of World War II.
Like Amazon and Microsoft, the cloud infrastructure service platform Google Cloud will play a key role in Alphabet’s success. Google Cloud ended its first profitable year in 2023 and should have no trouble scaling its revenue, profit, and operating margin in the coming years as companies increase their spending on cloud-based information technology.
Alphabet also has a healthy balance sheet, with nearly $108 billion in cash, cash equivalents and marketable securities as of March 31. The company can make acquisitions or organically invest in breakthrough projects without negatively impacting its bottom line or fundamental operating segments.
4. Metaplatforms
The company that ranks fourth on my list of stocks worth trillions of dollars by 2035 is a social media behemoth Metaplatforms (NASDAQ: META). Meta is the parent company behind the following ultra-popular social sites: Facebook, WhatsApp, Instagram, Facebook Mesenger and Threads.
Like Alphabet, Meta should be one of the main beneficiaries of sustained periods of economic growth for the US and global economies. Meta generates nearly 98% of its revenue from advertising, and companies tend to be looser with their marketing budgets when the U.S. and global economies are firing on all cylinders. With Meta’s social media “real estate” attracting 3.24 billion daily active users in the quarter ending in March, advertisers understand they won’t attract more attention on any other platform.
Metaplatforms can also take advantage of the long-tail growth opportunities in virtual/augmented reality, the metaverse and AI. While Meta’s Reality Labs segment is expected to generate cash flow in the coming years, CEO Mark Zuckerberg has a knack for building platforms and opening the floodgates of monetization when they’re good and ready (and not before ).
Staying somewhat on theme, Meta Platforms’ balance sheet gives the company the luxury of making these investments in its future. Meta ended March with $58 billion in cash, cash equivalents and marketable securities, and generates $77 billion in net cash generated from its operations on an annual basis.
5. Visa
The fifth largest trillion dollar stock in 2035 won’t be Nvidia, which I expect will fall victim to an AI bubble burst, or Apple, whose growth engine has come to a complete standstill over the past two years. On the contrary, it will be the world’s largest payment processor, Visa (NYSE:V).
Just as ad-driven platforms Alphabet and Meta are benefiting from extended periods of economic growth, Visa is reaping the benefits of higher business and consumer spending. Since the end of World War II, most economic expansions have lasted several years, with two periods of growth exceeding the ten-year mark. Payment processors are absolutely thriving during these expansions.
What gives Visa the opportunity to become one of the five largest publicly traded companies by 2035 are its seizeable opportunities. Visa is not only the undisputed number 1 in market share measured by credit card network purchase volume in the US (the largest global consumer market), but has also had a decades-long runway in many emerging markets where consumers and businesses are still largely underfinanced (e.g., Africa, the Middle East and Southeast Asia). Cross-border volume has consistently grown by double digits, testifying to this untapped international opportunity.
Moreover, Visa’s management team has managed to resist the temptation to become a lender. By focusing strictly on payment facilitation, Visa has been able to avoid the credit delinquencies and credit losses that arise during economic recessions and can derail credit institutions.
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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. Sean Williams has positions in Alphabet, Amazon, Intel, Meta Platforms and Visa. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Visa. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls to Intel, long January 2026 $395 calls to Microsoft, short January 2026 $405 calls to Microsoft, and short May 2024 $47 calls to Intel. The Motley Fool has a disclosure policy.
Prediction: These Will Be the Five Biggest Trillion-Dollar Stocks in 2035 (And Nvidia Isn’t One of Them!) was originally published by The Motley Fool
