Nvidia shares have surged more than 170% year to date amid excitement about artificial intelligence (AI). The chipmaker now has a market capitalization of $3.3 trillion, making it the second-most valuable public company in the world behind Apple.
But I think Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) can surpass $3.3 trillion in the next three or four years. Here’s why:
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Meta is currently worth $1.4 trillion, but its market value could increase 140% to reach $3.4 trillion by 2028. That forecast implies annualized returns of 25% over the next four years.
Alphabet is currently worth $2 trillion, but its market value could increase 70% to reach $3.4 trillion by 2027. That forecast implies annualized returns of 19% over the next three years.
Here’s what investors should know about these AI stocks.
Meta Platforms owns four of the seven most popular social media networks in Facebook, Instagram, WhatsApp, and Messenger. Nearly 3.3 billion people interact with at least one of those platforms daily, and each interaction creates data that can inform ad campaigns. Those qualities have made Meta the second-largest adtech company in the world.
Meta will account for 21.9% of digital ad sales this year, up four-tenths of a percentage point from last year, according to eMarketer. And it could continue gaining share as it leans into artificial intelligence (AI). Its conversational assistant Meta AI has already drawn over 500 million monthly users since launching in April, and AI-driven recommendations have increased time spent on Facebook and Instagram by 8% and 6%,, respectively, year to date.
Additionally, over 1 million advertisers used Meta’s generative AI tools to create marketing content last month. CEO Mark Zuckerberg estimates those tools have lifted conversions by 7%, and he believes the company can unlock more productivity gains for advertisers in the future. That could certainly lead to market share gains.
Either way, Meta has a good shot at annual revenue growth in the high teens through the end of the decade. I say that because the adtech software market is forecast to increase at 22% annually through 2030, and digital ad spending is projected to increase at 15% annually. Meta should manage to split the difference, and the company also has opportunities beyond digital advertising.
Most notably, Meta has a nascent but potentially large opportunity in augmented reality (AR). The company recently showcased Orion, its first pair of fully holographic AR glasses. Zuckerberg says, “We’re not too far off from being able to deliver great-looking glasses that let you seamlessly blend the physical and digital worlds.” Grand View Research estimates the AR market will grow at 38% annually through 2030.
With that in mind, Wall Street expects Meta’s earning to increase at 21% annually over the next three years. That makes its current valuation of 26.7 times earnings look reasonable, especially when the two-year average is 26.9 times earnings. But Meta regularly beats estimates.
So, let’s assume earnings grow at 25% annually over the next four years. In that scenario, Meta’s market value would surpass $3.3 trillion by 2028 without any change in its price-to-earnings ratio.
Alphabet subsidiary Google is the largest digital advertising company in the world. It will account for 27.4%of digital ad spending this year, down six-tenths of a percentage point from the prior year, according to eMarketer.
But market share losses are limited to the open internet. The company is leaning into AI to maintain its dominance in search and video advertising through Google Search and YouTube, respectively.
To elaborate, Alphabet recently introduced generative AI overviews in Google Search, and CEO Sundar Pichai says engagement and user satisfaction are trending higher. The company is also using its Gemini model to surface relevant content for YouTube users. That has helped YouTube maintain its status as the most popular streaming service in the U.S., as measured by viewing time. Additionally, Alphabet will debut a video generation model called Veo to assist YouTube creators later this year.
Beyond advertising, Google is the third-largest public cloud, but it’s gaining share. The company accounted for 13% of cloud infrastructure and platform service spending in the third quarter, up two percentage points from the previous year. Strength in AI factored heavily into those share gains. Forrester Research recently recognized Google as a leader in AI infrastructure solutions and foundational large language models.
Beyond its core businesses, Alphabet has an opportunity in its autonomous driving subsidiary Waymo. While Waymo is unlikely to be a material source of revenue by 2027, it already factors into overall market value today based on future potential. Bloomberg recently reported that Waymo was valued above $45 billion in the latest funding round, and further progress — such as the planned launch of autonomous ride-sharing in Austin and Atlanta next year — could lift Alphabet’s overall market value in the coming years.
Wall Street expects the company’s earnings to increase at 16.7% annually over the next three years. That makes the current valuation of 22.7 times earnings look reasonable. But share gains in cloud computing could lead to faster growth, given that public cloud spending is projected to increase at 21% annually through 2030.
So, let’s assume Alphabet’s earnings climb at 19% annually over the next three years. In that scenario, the company’s market value would surpass $3.3 trillion by 2027 without any change in its price-to-earnings ratio.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
