Which will be the company next join the exclusive $1 trillion value club?
Nvidia (NASDAQ:NVDA) showed what happens when an established company is agile and quick to follow and push new trends. By supplying high-performance GPUs and harnessing them for ground-breaking AI development, the AI giant cornered another market.
This transition from the discrete GPU market to the infrastructure for generative AI was sufficient to push NVDA stock to the over $1 trillion market cap milestone in May 2023. It only took Nvidia until February 2024 to cross the $2 trillion barrier.
But which other stocks could accomplish the same feat? After all, NVDA shareholders can enjoy 204% returns on a one-year basis alone. Here are some $1 trillion candidates to consider.
1. Visa
What Nvidia is for GPUs and AI infrastructure,Visa (NYSE:V) is for payment processing. It shares a duopoly with MasterCard, while high-growth American Express (NYSE:AXP) is in distant third place. As such, investors should view Visa as the main beneficiary in the upcoming transition to digital money.
At the recent Special Meeting on Global Collaboration, Growth and Energy for Development by the World Economic Forum (WEF) in Saudi Arabia, prominent speakers reaffirmed the need to go full digital.
“We’re probably going to stop calling it the central bank digital currency [CBDC]. It’s going to be a digital form of cash, and at some point in time hopefully we will be able to be 100% digital”
Khalid Humaidan, Governor of the Central Bank of Bahrain (CBB)
Visa has actively participated in this global monetary transition following the company’s development of the CBDC Payment Module. In January 2022, Visa partnered with ConsenSys to connect different CBDC networks with existing payment rails. This makes Visa integral in bridging the ledgers of central banks and delivering the final digital product (wallet) to the end user.
Notwithstanding that trajectory, Visa’s market cap is steadily increasing. In January 2020, it was $413 billion, and it is now $563 billion. By participating in one of the backbones for global payments, V shareholders can rely on safe growth, benefiting from network effects.
A recent report from ResearchAndMarkets positions the global payments market to grow at a CAGR of 10.5%, forecasted to reach $4.78 trillion by 2029 from $2.64 trillion in 2023. Moreover, Visa returned $12.7 billion to shareholders in 2023 via stock buybacks. This is in addition to offering dividends, presently at 0.74% yield at $2.08 annual payout per share.
At $280.10 per share at press time, V stock is 23% above its 52-week low of $216.14. According to Nasdaq forecasting, the average V price target twelve months ahead is $316.57.
2. Taiwan Semiconductor Manufacturing Company
While Nvidia makes specific AI GPUs like A100 and H100, which found themselves across the Magnificent Seven companies, Taiwan Semiconductor Manufacturing (NYSE:TSM) is the world’s most advanced chip foundry. In other words, TSMC is the layer zero of chip making.
Although China ramped up its foundry building to circumvent US export controls, its Semiconductor Manufacturing International Corporation (SMIC) is still lagging behind TSMC. Specifically, the US control grid is hampering Chinese efforts to develop cutting-edge tech, such as gate-all-around (GAAFET) transistors.
Moreover, TSMC’s present 3nm FinFET (N3) technology is the most advanced high-volume semiconductor manufacturing technology. By 2026, the company is set to deliver the 1.6nm process. Taking this into account, TSMC’s global market share is likely to increase further from its present dominant position of nearly 60%, according to Counterpoint.
For comparison, Samsung is in distant second place at 13%. With the help of the CHIPS Act, previously covered Intel (INTC) aims to take Samsung’s place by 2030. TSMC’s market cap is presently at $796 billion, having grown by 67% over one year.
Notwithstanding black swan events, such as military conflict with China over Taiwan, the average TSM price target is $163.11 vs. the current $151.68 per share. This indicates another all-time high for TSM, up from the previous one of $155.58 on May 15th.
Such a dynamic is reminiscent of Nvidia’s rise, but the Chinese situation is dampening greater investor interest in TSM.
3. MicroStrategy
Perhaps the most clear-cut case for crossing the $1 trillion milestone is Michael Saylor’s MicroStrategy (NASDAQ:MSTR). Aggressively hoarding Bitcoin, at 214,400 BTC as of May 1st, Saylor counts on central banks to further debase fiat currencies, using Bitcoin as an exit strategy.
This is not a surprising conclusion given central banks’ penchant to monetize debt perpetually while governments rack up massive budget deficits. The US national debt is currently at $34.7 trillion and continues accelerating. This makes it exceedingly likely that the Federal Reserve will attempt to inflate away the astronomical/unpayable debt.
People will likely safeguard their wealth with Bitcoin (BTC) as they realize this dynamic. Although there are thousands of cryptocurrencies, Bitcoin stands apart as the most decentralized and most heavily secured owing to the network effect from Bitcoin’s proof-of-work miners.
In turn, MicroStrategy is a proxy for Bitcoin’s market cap rise, having utilized debt to accumulate scarce bitcoins. The company’s market cap is $29.3 billion, rapidly rising from $3.7 billion in May 2023. Considering that Bitcoin ETFs wildly outperformed gold ETFs, with more funds’ allocations likely incoming, even the baseline forecast of $300,000 per BTC by 2026 would bring Bitcoin’s market cap to nearly $6 trillion.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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