Take a look at the list of the world’s largest companies by market capitalization, and you might notice a common thread across most of them: the group’s largest members have made big bets on artificial intelligence (AI). And these bets seem to be paying off.
Currently, six AI stocks are worth more than $1 trillion. They might have company in the not too distant future. Here are the top six – and the two AI stocks most likely to join the club.
The $1 Trillion Six-Pack
Apple (NASDAQ:AAPL) And Microsoft (NASDAQ:MSFT) are in a tight race to become the world’s largest company. Both of their market capitalizations hover around $3.3 trillion.
For a while, it looked like Apple might be left behind in the race to develop AI technology. Its Siri AI assistant seemed almost outdated compared to the new large language models (LLM).
However, Apple’s recent launch of new generative AI capabilities has been a game-changer. Some believe the new Apple Intelligence features could even spark a super iPhone upgrade cycle.
Microsoft has benefited immensely from its relationship with ChatGPT creator OpenAI. The tech giant’s cloud business has particularly grown thanks to the huge tailwind from generative AI. The company’s introduction of AI-powered Copilot+ PCs is also expected to provide a boost to sales of its operating systems.
Nvidia (NASDAQ:NVDA) hot on the heels of Apple and Microsoft with a market capitalization of around $3.2 trillion. The manufacturer of graphics processing units (GPUs) has been the poster child for the AI boom over the past 18 months. Nvidia’s upcoming rollout of its Blackwell GPU architecture could keep it at the top of the AI chip market.
You could say that Google’s parent Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) And Amazon (NASDAQ:AMZN) are in the second tier of mega-cap AI stocks. Alphabet’s market cap is around $2.2 trillion, while Amazon’s is just under $2 trillion.
Both companies, like Microsoft, are cloud service providers. Generative AI could be the biggest driver of cloud growth so far. Alphabet and Amazon are using AI to increase revenue in their core non-cloud businesses (Alphabet’s search and Amazon’s e-commerce). They also hope to become winners in self-driving car technology: Alphabet with its Waymo unit and Amazon with Zoox.
Metaplatforms (NASDAQ:META) lags behind other AI leaders with a market capitalization of nearly $1.3 trillion. The company uses AI extensively in its social media applications, including Facebook and Instagram. CEO Mark Zuckerberg predicted in late 2023 that AI-powered business messaging would be “the next major pillar” of his business.
Next in the club
Which AI companies are best positioned to join these six companies in the $1 trillion club? My votes go to Broadcom (NASDAQ:AVGO) And Semiconductor manufacturing in Taiwan (NYSE:TSM).
Broadcom’s market capitalization now stands at nearly $780 billion. The stock jumped last week after the semiconductor maker reported strong results for the second quarter of fiscal 2024. Revenue jumped 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. Although this split will not impact Broadcom’s underlying business, it could make the stock more attractive to retail investors.
Taiwan Semiconductor Manufacturing’s market capitalization of around $740 billion is not far behind Broadcom’s. The company makes chips for several of the biggest leaders in AI, including Apple, Nvidia and Broadcom.
As the name suggests, the company is based in Taiwan. However, it plans to begin production at its first advanced chip manufacturing facility in Arizona next year. It is also building another manufacturing plant in the state and plans to build a third. These investments could solidify the company’s status as the go-to chipmaker for the world’s top AI companies.
Are Broadcom and Taiwan Semiconductor smart choices?
Although 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 investors and value investors will likely want to look elsewhere. Neither title is cheap. Although both pay dividends, their yields are only around 1.4%, which isn’t enough to attract many income investors.
However, if you’re looking for growth and don’t mind potential volatility, Broadcom and Taiwan Semiconductor Manufacturing could be a good fit for you. I expect both stocks to continue to beat the market in the coming years as AI adoption increases.
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Suzanne Frey, an executive 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 spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, 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 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 on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
6 artificial intelligence (AI) stocks are worth over $1 trillion. Here are the next 2 most likely members to join the club. was originally published by The Motley Fool
