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Globe and Mail
4 days ago
- Business
- Globe and Mail
Prediction: This Unstoppable Stock Will Join Nvidia, Microsoft, and Apple in the $3 Trillion Club Before 2029
Key Points Artificial intelligence (AI) is helping Meta Platforms unlock greater efficiency. The company's digital advertising business is benefiting from these next-generation algorithms. Meta has other potential growth drivers that could fuel the next phase of its growth. 10 stocks we like better than Meta Platforms › There's been an undeniable shift over the past 20 years. During that time, technology companies have climbed the ranks of the world's most valuable companies, which was once the exclusive domain of industrial and energy concerns. For example, in 2005, ExxonMobil and General Electric were top of the class when measured by market cap, valued at $375 billion and $362 billion, respectively. Two decades later, it's the world's technology bellwethers that lead the pack. Topping the charts are three of tech's most recognizable names, which need little introduction. Artificial intelligence (AI) chipmaker Nvidia currently leads the pack at $4.3 trillion (as of this writing), with its stock recently hitting new all-time highs. Software giant Microsoft also notched a new record this week, cracking the $4 trillion mark. Rounding out the top three is iPhone maker Apple, with a market value of $3.1 trillion. With a market cap of $1.9 trillion, it might seem premature to suggest that Meta Platforms (NASDAQ: META) has been earmarked for admission in the $3 trillion club. However, the company's recent performance has been exemplary, and the stock has soared 33% so far this year (as of this writing), following 65% gains in 2024. Its winning streak appears poised to continue. The ever-increasing reach of its social media platform, ongoing leverage of digital advertising, and novel strategy for leveraging AI could combine to help Meta earn its membership in this exclusive fraternity. A digital advertising powerhouse The dawn of generative AI in late 2022 marked a pivotal point in the evolution of technology, and companies that were able to capitalize on that opportunity have reaped the rewards. Meta had already established expertise in the use of algorithms to advance its business, and generative AI took that to the next level. The company not only uses AI to surface more relevant content on its social media platforms but also provides a suite of AI-powered tools to assist merchants who use its digital advertising services. The results have been profound. In the second quarter, Meta's revenue of $47.5 billion jumped 22% year over year, driving diluted earnings per share (EPS) of $7.14 up 38%. CEO Mark Zuckerberg revealed that AI is "unlocking greater efficiency and gains across our ads system ... [driving] roughly 5% more ad conversions on Instagram and 3% on Facebook." He went on to say that "AI is significantly improving our ability to show people content that they're going to find interesting and useful." Meta's consistent user growth continues to fuel its success, as those who used one of Meta's family of social media platforms -- Facebook, Instagram, WhatsApp, or Threads -- increased 6% year over year to 3.48 billion, so its reach is unrivaled. This captive audience forms the basis of the company's digital advertising success, making it part of a triumvirate in the space. Alphabet 's Google controlled an estimated 26% of the U.S. digital advertising market in 2024, while Meta gained ground with 21%, and Amazon took 14%, according to data compiled by business intelligence platform eMarketer. Meta's digital marketing is inseparable from its social media platforms, fueling its inexorable rise. The AI wildcard As the world's largest cloud infrastructure operators, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have a target market for their AI services, a luxury Meta doesn't have. To capitalize on the opportunity, the company tapped its treasure trove of data and trained a suite of homegrown, open-source, industry-favorite large language models (LLMs). The group, dubbed LLaMA (large language model Meta AI), is available via all the major cloud platforms and powers the Meta AI chatbot. Meta isn't stopping there. The company has recently been on a hiring spree, reportedly spending billions of dollars to assemble the top talent in the field of AI to develop the first "personal superintelligence." Meta has expanded beyond its social media roots into virtual reality (VR) and the metaverse, with AI being the company's latest area of interest. While Meta hasn't yet been able to significantly monetize these ambitions, Zuckerberg believes they hold the key to its future growth prospects and will eventually help boost profits. The path to $3 trillion Meta has a market cap of roughly $1.96 trillion (as of this writing), so it will take a stock price increase of roughly 53% to increase its value to $3 trillion. According to Wall Street, Meta is expected to generate revenue of $195 billion in 2025, giving the stock a forward price-to-sales (P/S) ratio of 10. Assuming its P/S remains constant, Meta would need revenue of roughly $299 billion annually to support a $3 trillion market cap. Wall Street is currently forecasting growth for Meta of more than 12% annually over the coming five years. If the company attains that target, it could achieve a $3 trillion market cap as soon as 2029. For context, Meta has grown its annual revenue by 840% over the past decade and by 22% in the most recent quarter, and frequently surpassed Wall Street's growth expectations -- so those estimates are likely conservative. Furthermore, at 30 times earnings, Meta's valuation is in line with that of the S&P 500 -- yet has generated stock price gains of 719% over the past 10 years, far exceeding the S&P 500, which rose just 203%. That makes a compelling case that Meta Platforms is an unqualified buy. Should you invest $1,000 in Meta Platforms right now? Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Danny Vena has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends GE Aerospace 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.
Yahoo
17-06-2025
- Business
- Yahoo
Goldman Sachs Says the 'Prominent 10' Could Be China's 'Magnificent Seven'
Goldman Sachs named the 10 large-cap Chinese companies it expects to grow their share of China's equity market. The list includes giants like Tencent, Alibaba, and BYD. These stocks are expected to benefit from a more accommodating government, advances in artificial intelligence, and the relative fragmentation of the Chinese stock market. The 10 largest public companies account for 17% of China's stock market, compared with 33% in the over, Magnificent Seven. There's a new elite equities club in town, though the name is a bit less catchy. The "Prominent 10' are China's large, public-owned enterprises (POEs) that Goldman Sachs in a Sunday note said it expects to benefit the most in the coming years from a lighter regulatory approach and investments in artificial intelligence. The companies: internet and gaming behemoth Tencent, e-commerce giant Alibaba, smartphone maker Xiaomi, electric car company BYD, digital shopping platform Meituan, video game maker NetEase, appliance maker Midea, pharmaceutical company Hengrui, digital travel agency and sportswear maker ANTA. They 'embody the theme of AI/Tech development, self-sufficiency, 'Going Global', services and new forms of consumption, and China's improving shareholder returns,' said Goldman. Their advantages, Goldman's analysts said, should help the group to grow earnings by 13% annually over the next two years. The Chinese equity market's relative fragmentation and modest valuations underpin Goldman's hopes for the Prominent 10. China's 10 largest public companies account for 17% of the total market based on their market capitalization, compared with 33% in the U.S. and more than 50% in Korea, France, and Germany. Its largest POEs also trade at a 22% premium to the overall market based on forward earnings, according to Goldman, down significantly from 74% in 2021 and well below the 43% premium investors pay for the Magnificent Seven. If China's largest POEs traded at the same valuation as the Mag Seven, they'd be worth an additional $313 billion. Another reason Goldman expects these companies to thrive is the Chinese government's recent pivot toward supporting the private economy after cracking down in 2021. Chinese President Xi Jinping in February spoke at a private-sector symposium attended by many of China's preeminent entrepreneurs, and the company this year also enacted the Private Economy Promotion Law, reportedly China's first-ever law promoting private business, and updated its regulatory framework for mergers and acquisitions. 'All these should help revitalize POEs' investment appetite (animal spirits), thereby supporting their organic and acquisitive growth down the road,' the analysts wrote. Artificial intelligence is expected to be foundational to the success of these companies. The companies with the capital to invest in AI research and infrastructure are best positioned to remain competitive in the long run, Goldman says. And the Prominent 10 are concentrated in industries—interactive media, IT services, software, health care technology—that are fervently embracing AI. Their size could also help the Prominent 10 to expand their international businesses. Due to intense domestic competition that has strained profit margins, Chinese companies have increased their presence abroad over the last decade; international sales accounted for 17% of total revenue last year, up from 10% in 2017. The largest companies with the healthiest balance sheets and cash flows, says Goldman, should have more success expanding abroad than their smaller competitors. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
