Prediction: 3 Stocks That Will Be Worth More Than Apple 10 Years From Now

Prediction: 3 Stocks That Will Be Worth More Than Apple 10 Years From Now

Not that it’s a competition, but the relative size of a company – as measured by its revenue, profits or market capitalization – can be a clear indication of its past and present success . Specifically, relative changes in any of these indicators can help investors determine where real growth is occurring…and where it is not.

With that as a backdrop, here’s a look at three companies that could be bigger than Apple (NASDAQ:AAPL) over the next decade. And that means something. The iPhone maker’s current market capitalization stands at $2.9 trillion, making it the second-largest publicly traded company in the world (just behind Microsoft).

1. Broadcom

When most investors think of artificial intelligence (AI) stocks, names like Microsoft or Nvidia come to mind. Broadcom (NASDAQ:AVGO) this is generally not the case.

But maybe it should.

Broadcom makes many of the components you’ll find in wireless connectivity technology, such as Wi-Fi routers and wireless modems. It also manufactures fiber optic connectivity equipment and Ethernet networking solutions, as well as software that makes the most of this hardware. Without this company’s solutions, the wireless connectivity landscape would be significantly different.

There is, however, a very specific reason why Broadcom could be a bigger company than Apple in 10 years. This is the market that Broadcom is quietly entering: artificial intelligence (AI). In short, this company makes the chips that AI data centers need, but most people never think about them.

For example, take Broadcom’s 200 G/channel Vertical Cavity Surface Emitting Laser (VCSEL), unveiled earlier this year. This is the first fiber optic equipment of its kind in the industry, capable of handling the massive loads of digital data processed and delivered by AI platforms.

Also earlier this year, the company introduced the industry’s first 51.2 terabits per second (Tbps) co-packaged optical Ethernet switch, which not only connects multiple processors together at blazing fast speeds, but also uses 70 % less energy. than comparable technology. This equipment does not compete with Nvidia processors, but it complements Nvidia products.

In total, Broadcom expects to sell around $10 billion in AI-oriented chips This year. For perspective, that’s about 10% of the company’s projected revenue for 2024. However, that amount only scratches the surface. Straits Research estimates that the AI ​​infrastructure market is poised to grow at an annualized rate of nearly 21% per year through 2030.

Already a leader in this neglected segment of the AI ​​market, Broadcom is well-positioned to capture more than its fair share of its growth. This growth could easily push its current market capitalization of $650 billion beyond that of Apple. This is especially true as Apple’s business is transitioning from a growth-driven business driven by iPhone sales to a slower, value-driven business led by its iPhone sales arm. services.

And speaking of value…

2. Berkshire Hathaway

Although Broadcom is a growth technology stock, not all big opportunities have to come from this ticker category. Indeed, don’t be surprised to see incredible growth from a name on the opposite extreme of that spectrum – a value-oriented stock like Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B).

Surprised? It would be a little unusual if you were not. Value stocks are so called largely because these companies are not capable of strong growth. Their strong suit is consistent cash flow which often results in reliable dividends. It’s no secret that Warren Buffett – Berkshire Hathaway’s chief guru – is content to leave $189 billion of Berkshire’s cash uninvested simply because he doesn’t see such stocks worth buying. at their current price.

But there’s a very specific strategic reason why you might consider taking a stake in Berkshire Hathaway sooner rather than later: We may be on the cusp of a multi-year wave of strong performance in value stocks.

This forecast is based on the current economic context. Interest rates are high, inflation is high, and debt (both business and consumer) is high. And Dear. While not necessarily causing a recession, these conditions often hurt growth stocks but don’t pose too much of a problem for value stocks. A handful of value-oriented sectors with strong pricing power – such as utilities and consumer staples – can thrive in such an environment.

Of course, it’s a bit concerning that Berkshire would rather do nothing with its idle cash than at least take a chance on a low-risk dividend-paying company. If its capital is not used, the company’s market capitalization – currently close to $900 billion – may never reach or eclipse Apple’s current capitalization of just under $3 trillion. dollars.

Don’t worry too much, though. Most of Berkshire Hathaway’s value is represented by existing holdings in value stocks or private companies. And over the coming decade, Buffett or his deputies will surely find a few more opportunities worth exploring.

3. Amazon

Last but not least, add the e-commerce giant Amazon (NASDAQ:AMZN) to your list of companies that could be bigger than Apple in 10 years.

This is one of the shortest distances to travel. Amazon’s current market capitalization is $1.9 trillion, compared to Apple’s $2.9 trillion. Certainly, Amazon’s days of higher growth are also likely in the rearview mirror, and even if Apple’s future isn’t as compelling as its past, it continues to move forward.

There is, however, something new about Amazon that could still easily propel it past Apple by 2034. It’s the fact that Amazon is ultimately focusing on profitability as much, if not more, than on growing customers. income. The latest quarter’s net margin percentage of 6.4% (of revenue) is the company’s most profitable since the worst of the COVID-19 pandemic, which was a clear boon for its activity. The 47.6% gross profit margin in the same quarter is also a record for the company, extending a long streak of consistent improvement since 2012.

What explains this growth in margin? Most investors know that the company’s cloud computing business is considerably more profitable than its e-commerce business. Indeed, although Amazon Web Services (AWS) represents only about 16% of Amazon’s revenue, AWS is responsible for about two-thirds of the company’s operating income. Growing this business does more than its fair share of the heavy lifting.

However, the element of the bullish thesis that is not fully appreciated by interested investors actually concerns e-commerce. This sector is now more profitable than ever. Nearly 6% of last quarter’s North American sales were turned into operating profit, while its long-losing international e-commerce business returned to positive territory, after finally reaching profitability during and because of the pandemic .

What was missing from the formula — perhaps it was just a matter of scale — is now in place. Most investors don’t seem to realize this yet, but they will as Amazon continues to make the most of its massive size and now-refined operation.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Amazon, Apple, Berkshire Hathaway, Microsoft and Nvidia. 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.

Prediction: 3 stocks that will be worth more than Apple in 10 years was originally published by The Motley Fool

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