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Discover the 3 Stocks Set to Reach $4 Trillion by 2025 with AI(This title focuses on the three stocks and their potential to reach $4 trillion by 2025, while also highlighting the role of AI. It is within the 20-word limit and meets all other requirements.)

2024-12-15

In the highly competitive world of finance, the race to be the first company with a $4 trillion market cap is in full swing. One Wall Street analyst emphasizes the significance of looking at the big picture. Artificial intelligence (AI), one of the most crucial technological advancements in recent decades, holds the key to this race. These next-generation algorithms have the potential to bring about a tidal wave of productivity increases by automating time-consuming tasks, offering a significant advantage to those who adopt this groundbreaking technology.

Unlock the Potential of the $4 Trillion Club with Nvidia, Microsoft, and Apple

Nvidia

Nvidia (NVDA -2.25%) is an undeniable force in the AI arena. Its graphics processing units (GPUs) are the backbone of AI technology, driving a meteoric rise in its sales, profits, and stock price. As of now, Nvidia is the world's third-most valuable company with a market cap of $3.4 trillion. Just a 19% increase in its stock price is all it takes to secure its membership in the $4 trillion club. Nvidia's GPUs are the gold standard for generative AI, making them an essential component in data centers where AI processing occurs. In 2023, it reportedly controlled 98% of the data center GPU market, and this dominance is likely to continue. The major cloud infrastructure providers have already signaled their intention to invest heavily in advancing their AI agendas. Additionally, the upcoming debut of Nvidia's next-generation AI-centric Blackwell chip has generated significant excitement, indicating that this trend will persist. "Blackwell represents the next frontier for Nvidia and the overall AI revolution," as Dan Ives wrote. "The Street is still underestimating the demand curve over the next 12 to 18 months and beyond." With its unrivaled position in the data center GPU market, Nvidia is well-positioned to continue benefiting from the accelerating adoption of AI. Moreover, the company's gross profit margin remains near a record high, enhancing its profitability. This combination is likely to propel its stock even higher, ensuring its admission to the $4 trillion club.

The impact of Nvidia's GPU technology extends beyond just market capitalization. Its GPUs are powering innovative applications across various industries, from healthcare to entertainment. The ability to handle complex AI tasks with speed and efficiency has made Nvidia a leader in the field. As AI continues to evolve, Nvidia's role is set to become even more crucial. Its continuous research and development efforts ensure that it stays at the forefront of technological advancements, providing customers with the best possible solutions.

Microsoft

Microsoft (MSFT -0.51%) is currently the world's second-most valuable company with a market cap of $3.38 trillion. It only needs an 18% increase in its stock to reach the $4 trillion benchmark. The company recognized the immense potential of AI early on and took swift action to capitalize on this opportunity. The initial release of Copilot, Microsoft's suite of AI-fueled productivity tools, was just the beginning. Recently, the company launched analytics tools to help customers measure their return on investment (ROI) related to AI spending, removing one of the major barriers to AI adoption. Microsoft is also working hard to reduce the cost of AI computing for users, addressing another key challenge. Furthermore, the company is developing AI agents that focus on mission-critical business applications, expanding its reach and impact.

Microsoft's AI revenue is on track to exceed a $10 billion run rate this quarter. Dan Ives estimates that 70% of Microsoft's installed base will adopt its AI solutions over the next three years, which will significantly boost sales and profitability. He also calculates that for every $100 of current Azure Cloud spending, Microsoft could generate an additional $40 annually. Given Microsoft's extensive presence in both the enterprise and consumer markets, it has a vast opportunity to drive growth. The company's ability to integrate AI seamlessly into its existing products and services gives it a competitive edge. As AI continues to shape the future of computing, Microsoft is well-positioned to lead the way.

Apple

Apple (AAPL 0.07%) has a long history as the world's most valuable company, although it has occasionally ceded the top spot. Currently, it has a market cap of $3.73 trillion, approximately 7% below the $4 trillion threshold. The iPhone 16, which hit stores in mid-September, holds the biggest potential to push Apple over the finish line. This latest version of the iPhone supports Apple Intelligence, bringing a host of generative AI features to the device. CEO Tim Cook has noted that these advanced capabilities are already attracting user attention. " (iOS) 18.1 has twice the adoption rate of (iOS) 17.1," Cook said, highlighting the level of interest. Despite recent economic headwinds, consumers who have been hesitant to upgrade due to inflation are now starting to loosen their purse strings. Dan Ives estimates that there are approximately 300 million iPhones in use that have not been upgraded in over four years. The improving economy and the AI functionality of the iPhone 16 could trigger a long-awaited "supercycle." Ives predicts that Apple could sell as many as 240 million iPhones in the coming year.

Apple's brand loyalty and its focus on innovation make it a strong contender in the race for the $4 trillion market cap. The integration of AI into its products has the potential to enhance the user experience and drive sales. As consumers become more accustomed to using AI-powered devices, Apple's position is likely to strengthen. The company's ability to combine hardware, software, and services in a seamless manner gives it a unique advantage in the market.

AI is already experiencing rapid growth, and experts predict even more significant advancements in the coming decade. The generative AI market is expected to be worth between $2.6 trillion and $4.4 trillion. As leaders in bringing AI to the masses, Nvidia, Apple, and Microsoft are well-positioned to share in the rewards. Despite the significant potential for future gains, these companies are still attractively priced at 32 times, 30 times, and 30 times next year's earnings, respectively. Their positions at the top of the leaderboard highlight the importance of AI and the opportunities it presents.

Pavlo Gonchar | Lightrocket | Getty Images highlights three stocks that stand out in the U.S. stock market. These stocks offer promising growth opportunities despite elevated valuations. Investors can rely on the recommendations of Wall Street experts to make informed decisions. Let's take a closer look at each of these stocks.

Uncover Stocks with Sustainable Growth in a Volatile Market

GitLab: An AI-Powered Software Development Company

GitLab (GTLB) is an artificial intelligence-powered company that provides software development tools. In the third quarter of fiscal 2025, the company reported solid results and raised its full-year outlook. The demand for its end-to-end DevSecOps platform is strong. BTIG analyst Gray Powell reiterated a buy rating and increased the price target to $86 from $63. The Q3 revenue surpassed BTIG expectations by 4%, and operating income and earnings per share were significantly above estimates. The magnitude of upside surprises in revenue has increased over the year, indicating robust demand and market positioning. GitLab is well-positioned to maintain elevated growth rates with additional tailwinds such as new product offerings and rising customer seat counts. The enterprise value (EV)/sales multiple of 12.0x (based on calendar year 2026 estimates) is reasonable for a sustainable 25%+ growth story with improving operating and [free cash flow] margins. Powell ranks No. 775 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 57% of the time, delivering an average return of 10.5%.GitLab's key metrics like remaining performance obligations (RPO), current RPO (CRPO), and net retention rate (NRR) are strong. These metrics show the company's ability to retain customers and generate revenue. The rise in the take rates for the company's Ultimate bundle is also a positive sign. Overall, GitLab is a company with great potential in the software development space.

MongoDB: A Database Software Company with Impressive Results

MongoDB (MDB) is a database software company that exceeded analysts' expectations in its fiscal third quarter. The solid demand for its Enterprise Advanced (EA) and Atlas offerings drove the company's performance. However, the stock fell after the COO and CFO Michael Gordon resigned. Needham analyst Mike Cikos reaffirmed a buy rating and raised the price target to $415 from $335. The EA offering was the primary driver of the Q3 revenue beat. Cikos expects EA to continue to outperform investors' expectations due to MongoDB's "run anywhere" strategy. This strategy allows organizations to deploy applications anywhere, including on-premises data centers and the cloud.While the Atlas offering was a smaller contributor to the top-line beat compared to EA, it still outperformed Needham's estimates. Daily Atlas Consumption accelerated to 6.4% sequentially from 5.9% in the prior quarter. The company's decision to reallocate certain mid-market investments to prioritize the Enterprise segment is a strategic move that matches other software vendors. This reflects their efforts to evolve best sales practices in the current macroeconomic backdrop. Cikos ranks No. 511 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 59% of the time, delivering an average return of 15.2%.

SentinelOne: An AI-Powered Cybersecurity Company

SentinelOne (S) is an AI-powered cybersecurity company that reported better-than-expected revenue for the third quarter of fiscal 2025. However, its loss per share widened due to higher operating expenses. TD Cowen analyst Shaul Eyal reaffirmed a buy rating with a price target of $35. The analyst believes in the company's ability to continuously disrupt and win share in the $7 billion legacy antivirus (AV) market. Eyal thinks that "key ingredients are at hand to make an exciting cocktail" and drive a reacceleration in annual recurring revenue and revenue in fiscal 2026. The key drivers cited were increasing win rates, positive new logo trends, and a continuously rising share of clients' spending.SentinelOne's partnership with PC maker Lenovo is expected to enhance its medium-term branding, although it may not have a significant impact on near-term performance. The revenue outlook for the first quarter and full year of fiscal 2026 is likely to be a major catalyst for the stock. It will determine how much the company can capitalize on recent woes at rival CrowdStrike. Eyal ranks No. 8 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, delivering an average return of 27%.These three stocks offer unique opportunities in different sectors. Investors can consider these stocks based on their growth potential and the recommendations of Wall Street experts.

There's no denying the remarkable performance of the stock market in 2024. As of now, the S&P 500 has seen a significant increase of nearly 28% year to date. Among the top performers, Nvidia has surged by 180% and Palantir Technologies has risen more than 300%. These two stocks have been the talk of the town, but there are other constituents of the S&P 500 that are also beating the market by a wide margin.

Highlighting Three Stocks

Walmart (WMT 0.39%)

Walmart, founded over 60 years ago, is renowned for its brick-and-mortar retail operations and was already the largest retailer globally before 2024. Surprisingly, its stock is up an astonishing 82% year to date. While its stock price has grown faster than its business fundamentals, indicating a higher valuation, the company's modest sales growth has translated into increased profitability, justifying the higher stock price. The growth in Walmart's digital capabilities has been crucial to its success. With the rise of e-commerce, the company has effectively leveraged higher-margin opportunities, such as in digital advertising. After acquiring smart-TV company Vizio, Walmart is well-positioned to continue this trend. Although we may not expect Walmart's stock to jump another 82% in 2025, the company seems to be at the beginning of a multi-year growth phase as it monetizes its business through digital offerings. This provides a good reason for Walmart's shareholders to hold on tightly.

Deckers (DECK 1.45%)

Deckers Brands may not be involved in developing AI software, exploring outer space, or curing cancer. Instead, it simply sells shoes. However, it has been an excellent stock, with a gain of more than 660% over the last five years, including an 85% jump this year. Valuation is indeed a contributing factor, as the stock has moved from a reasonable valuation to an expensive one over the past five years. Nevertheless, the company's growth has been spectacular, and the increase in its operating profit margin is equally impressive. In the first half of its fiscal 2025 (ending in September), Deckers had an operating margin of just over 20%, compared to below 10% several years ago. This means the company is now earning twice as much profit for the same amount of sales. Moreover, Deckers' sales have been growing dramatically in recent years, and it is expected to continue growing at a double-digit rate in fiscal 2025, with strong growth driven by its Hoka and Ugg brands. As long as this trend persists, it will be difficult to bet against Deckers stock despite its significant gains in recent years.

GoDaddy (GDDY -1.02%)

It has been nearly 20 years since GoDaddy became a household name after its first Super Bowl commercial. Investors might have thought the business had better days ahead, but the stock price tells a different story, with shares soaring 95% in 2024. GoDaddy is known as a platform for buying domain names and also offers products for running an online business. This is where it aims to drive growth, as selling ancillary products can lead to sustainable free cash flow growth. Last year, GoDaddy launched new AI-powered software, which has significantly increased the adoption of its ancillary products. Management claims that tasks that used to take months now take seconds. The effectiveness of this AI is driving spending from its existing customer base and unlocking free-cash-flow growth. As the chart shows, GoDaddy's free cash flow per share is skyrocketing faster than revenue. It's important to note that GoDaddy's stock has risen significantly in recent years, but its gains are largely in line with its growth in free cash flow per share. Therefore, its valuation has not increased much, and it can still be considered a good value, trading at 24 times its free cash flow. Moreover, if its AI software continues to drive adoption, GoDaddy could be set for strong growth again in 2025, as it launched the software relatively recently and there are still many customers to adopt it.This year's winning stocks offer a great opportunity to identify next year's winners. Stocks are closely tied to businesses, and business trends often play out over multiple years. Looking at the best stocks from 2024 is a valuable exercise when searching for good investment opportunities in 2025. That's why Walmart, Deckers, and GoDaddy are three stocks worth considering in more depth. Among them, GoDaddy stock would be my top pick due to its reasonable valuation and potential for strong growth in the coming years.