In the stock market, three giants are steadily on the path to attaining a trillion-dollar market cap by 2028. This has led to this list of upcoming trillion-dollar companies. The first one, the powerhouse behind social media, is leveraging its AI investments to fuel unprecedented growth. The company is at the edge of tech advancements, from virtual assistants to generative AI.
The second one is a relentless pursuit of semiconductor advancements. This can be observed in considerable revenue growth. The strategic deployment of cutting-edge technologies like 3-nanometer nodes and a diversified portfolio position TSMC as a linchpin in the semiconductor industry.
On a different front, the third one continues its ascent through diverse business activities, with insurance underwriting and strategic investments contributing vitally. The conglomerate’s financial prowess, evident in considerable earnings and investment income growth, cements its standing as an enduring force in the market.
Read more to learn the intricacies of the first’s AI dominance, the second’s semiconductor supremacy, and the third’s diversified growth strategies. The article explores the factors propelling them towards trillion-dollar market valuations.
Meta (META)
AI stands out as a core focus for Meta (NASDAQ:META), and its advancements in this field can be considered a vital strength driving rapid growth. The company is projected to make heavy investments in AI, making it Meta’s most considerable investment area in 2024 regarding engineering and computing resources.
Additionally, the deployment of Meta AI, a new assistant accessible across messaging experiences and smart glasses, is a vital AI application. The assistant allows users to ask questions, access real-time information, and generate photorealistic images. Furthermore, integrating the AI Studio platform further amplifies Meta’s AI efforts, enabling users to create and interact with various AIs for assistance and entertainment. Additionally, the rollout of Emu, an image creation model, showcases Meta’s focus on AI-driven content creation. This makes it one of those trillion-dollar companies in the making.
Generative AI may continue to play an increasingly important role. It plays a pivotal role in Meta’s product roadmap. Llama 2, mentioned as a leading open-source model, signifies Meta’s contributions to the broader AI community. The sophisticated recommendation AI systems power feeds, reels, ads, and integrity systems. While less hyped than generative AI, these recommendation systems improve user engagement, as evidenced by a 7% increase in time spent on Facebook and a 6% increase on Instagram in the current year alone (Q3 2023).
Additionally, business-wise, AI tools for advertisers, such as Advantage+ shopping campaigns, have reached a $10 billion run rate. This reflects the effectiveness of Meta’s AI applications and positions the company as a valuable partner for advertisers looking to optimize their campaigns.
Overall, Meta’s focus on AI, like virtual assistants, content creation, recommendation systems, and ad tools, forms a solid foundation for rapid growth.
TSMC (TSM)
The fundamental factor that supports TSMC’s (NYSE:TSM) market value growth is its sequential revenue growth. For instance, in Q3 2023, TSMC experienced a noteworthy sequential revenue increase, demonstrating the company’s adaptability in a dynamic semiconductor market. The growth of 13.7% in NT dollars and 10.2% in US dollars reflects the successful execution of TSMC’s business strategies and the effectiveness of its production (fab) capabilities.
Additionally, this considerable revenue growth can be attributed to several key factors. Firstly, there is a solid ramp-up of TSMC’s industry-leading 3-nanometer tech. The successful deployment of advanced semiconductor processes reflects TSMC’s edge and ability to stay considerably ahead of the competition.
Furthermore, the higher demand for 5-nanometer tech drove revenue growth. Thus, TSMC can cater to the market’s appetite for advanced tech, which further solidifies the company’s position as a preferred foundry partner for semiconductor manufacturing.
In detail, the revenue distribution by technology provides valuable insights into TSMC’s portfolio and market demand. Specifically, the 3-nanometer process contributed 6% of wafer revenue in Q3, suggesting the rapid adoption of TSMC’s latest and most advanced semiconductor manufacturing node. Also, the 5-nanometer and 7-nanometer techs account for 37% and 16% of wafer revenue, indicating the broad spectrum of technologies TSMC offers. Hence, this diversified portfolio positions TSMC as a versatile partner for clients with varying requirements. All in all, TSMC could be one of those upcoming trillion-dollar companies.
Finally, the company’s dominance in advanced tech, defined as 7-nanometer and below, constituting 59% of wafer revenue, signifies TSMC’s focus on pushing the edge in semiconductor advancement. These advanced nodes have become increasingly critical for various applications. As a result, TSMC has leadership in this space. This is a vital growth driver for the company’s market value.
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) grows from diverse activities, but its insurance underwriting is a vital booster to the company’s bottom line.
For instance, in Q3 2023, it generated earnings of $2.4 billion, an edgy improvement compared to a loss of $1.1 billion in 2022. Similarly, for Q1-Q3 2023, underwriting earnings amounted to $4.6 billion, a vital boost from the $190 million in 2022 (Q1-Q3).
On the other hand, Berkshire Hathaway’s investment income is another vital fundamental for its performance. For instance, in Q3 2023, investment income increased by $1.1 billion compared to Q3 2022, and in Q1-Q3 2023, investment income growth amounted to $2.3 billion.
Additionally, the primary driver of this growth was higher short-term rates. These rates favorably impacted the yields on cash (marketable securities), and the weighted average yield on investments in fixed-maturity securities increased from 2.2% in Q3 2022 to 2.7% in Q3 2023. Also, dividend income was boosted by $19 million (0.3% year-over-year) in Q1–Q3 2023. This put it in the trillion-dollar companies category.
Moreover, realized gains and losses on investments are critical in Berkshire Hathaway’s bottom line. In Q3 2023, the company realized gains of $1.6 billion, highlighting gains in equity securities sales and changes in equity securities market prices. This marked a solid improvement from the realized losses of $6.3 billion in 2022. Lastly, for Q1-Q3 2023, realized gains boosted to $5.4 billion, compared to realized losses of $1.3 billion in 2022 (Q1-Q3). Therefore, Berkshire Hathaway’s investments across multiple industries may continue to deliver diversified value growth.
As of this writing, Yiannis Zourmpanos held a long position in META. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.