In the summer of 2018, more than four decades after its founding, Apple (AAPL 0.82%) became the first publicly traded stock to reach a $1 trillion market cap.
Today, many companies have surpassed this valuation threshold. Some are now worth several trillion dollars. Still, no company has ever reached the $10 trillion mark. But the stock below has a strong chance of doing so, creating plenty of profit opportunity for patient shareholders.
The artificial intelligence (AI) market will grow rapidly for decades
If you want to find the first $10 trillion stock, start by looking at artificial intelligence stocks. While the AI market has already received a lot of fanfare, the biggest days of growth are still to come. It’s very possible that the growth trajectory will follow that of the internet. After years of development, innovation surged in the late nineties, with enthusiasm hitting a fever pitch. After the dot-com bubble collapsed, however, enthusiasm quickly waned. Yet innovation did not cease. Today, the internet is arguably far bigger and more powerful than investors ever dreamed during the dot-com bubble.
Fast forward to today, and we see a very similar hype curve occurring. AI and machine learning have been in development for decades. Yet it was the more recent breakthrough in large language models (LLMs)0 and consumer platforms like ChatGPT that have brought the powers of AI to the masses. Today, nearly everyone expects AI to be a huge force in the years to come.
Market forecasts back up this enthusiasm. According to the United Nations, the global AI market was only worth around $189 billion in 2023. By 2033, however, the market size should approach $5 trillion. That’s plenty of size to create a $10 trillion stock given that AI stocks are typically priced at a high multiple of their trailing sales.
Which AI stock am I keeping my eye on? In my mind, there’s only one true contender.
Image source: Getty Images
Nvidia will be the first $10 trillion stock
When it comes to AI stocks, Nvidia (NVDA 3.30%) remains king. Its products sit at the center of the AI revolution. And while competition will eventually emerge, putting a dent into both sales growth and profitability metrics, Nvidia should continue to grow its business by double digits for at least another decade. Already armed with a $3.5 trillion market cap, this promising future should eventually put Nvidia in a position to become the first $10 trillion stock.
What is it exactly that makes Nvidia such a great investment? The company has an estimated 90% market share for graphics processing units (GPUs) designed to meet the needs of the AI industry. The AI industry relies on GPUs to train and execute its models. Without GPUs, the AI revolution likely wouldn’t be taking place, at least at the scale we’re currently experiencing. Through early investment, Nvidia’s chips have best-in-class performance metrics.
And due to CUDA — Nvidia’s mature development architecture — AI businesses can customize these chips to their exact specifications, embedding their business into Nvidia’s hardware and software flywheel. This gives Nvidia a stranglehold over the market, one that won’t immediately be lost simply due to a new product launch by a competitor.
In a nutshell, Nvidia stock is a great proxy for the AI industry right now. Wherever the AI market goes, Nvidia will follow — or perhaps lead the way. Because most estimates call for 30% annual growth for the AI market over the next decade and beyond, I expect Nvidia to become the first $10 trillion stock in history.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool has a disclosure policy.
