If we go back about five months ago, no one was looking for the next trillion-dollar companies. Apple (NASDAQ:AAPL) was making new 52-week lows at the start of 2023, while many mega-cap tech names were rolling over in late December and early January.
It didn’t matter if it was a well-established tech giant or the top companies of the future; investors were selling these names left and right. Now, just a few months later and we’ve had a completely different situation.
Just a handful of tech stocks have driven almost 90% of the gains in the S&P 500, while the Nasdaq is up more than 21% so far for the year. A few of these names have even doubled in price from the 2023 low.
The robust price action has investors looking for the future trillion-dollar companies. There are already a few that have cleared this hurdle and the current ones include: Apple, Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG).
Outside of those, then, what are the next trillion-dollar companies?
I know, I know…everyone’s favorite stock of the moment is Nvidia (NASDAQ:NVDA). There are probably a few readers rolling their eyes saying, “I knew this list would have Nvidia.” To be fair though, I have been a big proponent of Nvidia over the years — even calling it one of the future trillion-dollar companies two years ago.
By now, it’s no secret that Nvidia is helping to power the AI revolution taking place. Will it be the only winner? Of course not. However, it’s one of the primary focuses right now, regardless of any supply related issues or valuation constraints on the stock price.
Back at its high, Nvidia stock commanded a market capitalization north of $800 billion. So it’s really not farfetched to think this company could be one of the future trillion-dollar companies, especially with its work in AI.
Analysts expect impressive growth this year and next, calling for double-digit jumps in earnings and revenue.
You could put both Meta (NASDAQ:META) and Tesla (NASDAQ:TSLA) in this spot, as both firms have crossed the $1 trillion barrier in the past. I really like the long-term potential of Tesla. While it does have increasing competition in the EV space, it continues to generate strong results and solid growth.
That said, the company leans heavily on Elon Musk as its leader. It also leans heavily on the global economy. That’s not to say Meta would fare any better during a recession. I believe the stock performance leans less heavily on CEO Mark Zuckerberg and its valuation is lower.
Plus, the stock has robust momentum right now. While up just 27% in the past 12 months, shares are up more than 100% so far in 2023.
That’s as the firm continues to slash its costs and focus on the core business. It’s letting all this metaverse talk cool off and is focusing on what everyone else seems to be: AI.
I don’t know if that’s the right call or not. But what I do know is that social media doesn’t seem to be going anywhere anytime soon and that online ads are plenty profitable at the moment.
Berkshire Hathaway (BRK.B)
The slow-and-steady pick to join the $1 trillion club? Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B).
Sporting a market cap of more than $700 billion, the firm is on its way. The best part? It’s a total conglomerate with a low valuation.
Berkshire Hathaway has a large portfolio of private and public companies. Of the latter, Apple dominates as the largest position. However, Berkshire is often able to nab deals that regular investors (even institutional investors) don’t have access to.
At the hands of Warren Buffett and Charlie Munger, investors know the firm takes its time to make savvy, smart deals. The duo have trained its up-and-coming portfolio managers under the same principles. While no one will ever be Buffett or Munger, knowing the company has set up a succession plan should help ease the eventual transitions from the top.
As it stands, analysts expect mid-single-digit revenue growth this year and next year (roughly 6.5%) and roughly 13% earnings growth in 2023 and 2024.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.