U.S. equities appear to be back on the rise in May. After suffering significant losses in the month of April, both the S&P500 and tech-heavy Nasdaq Composite have more than recovered. In fact, the Nasdaq has risen 11.24% as of the end of Friday’s trading session. Leading the rise of U.S.-listed stocks has largely been technology companies. Everything from the rise of cloud computing to advanced generative artificial intelligence (AI) technologies have boosted share prices.
Tech giants, including Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet‘s (NASDAQ:GOOG, GOOGL) Google have become trillion-dollar companies in terms of their stock market capitalization. Over the next decade, several mega-cap tech stocks are well on their way to reaching $1 trillion. Below are three of them.
CrowdStrike (CRWD)
CrowdStrike (NASDAQ:CRWD), which boasts an $84 billion market cap, has become a dominant force within the cloud-based cybersecurity space. Embedding artificial intelligence technology into its vulnerability management (VM) tools has only increased the value of its products. CrowdStrike’s Falcon end-point security platform had its debut way back in 2013 and always employed machine learning techniques to identify threats across an enterprise’s technology apparatus. The release of advanced AI models has allowed the platform to be a one-stop solution for end-point security.
Cloud-based cybersecurity has increased in demand over the past decade. The rise of cloud computing technology placed tons of enterprise data and applications on cloud servers. In a multitude of manners, the COVID-19 pandemic accelerated demand for cloud products, as many businesses went remote and adopted online tools powered by cloud technology. With companies storing much of their data in distant servers versus on their own premises, cybersecurity has become increasingly important.
Not to mention, the cybersecurity space is succumbing to increased consolidation. A lot of these smaller cybersecurity players have lost out to other larger players, including CrowdStrike. For evidence, one just needs to observe the robust double-digit growth rates of CrowdStrike’s sales figures versus the plummeting rates of similar VM platforms like Varonis (NASDAQ:VRNS), Rapid7 (NASDAQ:RPD), or Qualys (NASDAQ:QLYS).
CrowdStrike shares have risen 35.5% on a year-to-date-basis and could very well continue their rise as the platform dominates its respective space.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is a key semiconductor computer processor giant. Consumer technology enthusiasts know AMD for their competitively priced and quality central porcessing units (CPUs) and graphics processing units (GPUs). The chipmaker was able knock Intel (NASDAQ:INTC) off its feet due to adopting a fabless model of producing silicon chips. That is, rather than being bogged down on the manufacturing side of chipmaking like Intel, AMD outsourced that to the very capable Taiwan Semiconductor Manufacturing (NYSE:TSM). It effectively allows it to focus on chip design and efficiency.
AMD next momentous rise will be in the space of AI chips. The semiconductor firm announced an array of new GPUs that would empower the creation of large language models (LLMs) in June 2023 and followed that up with subsequent releases in December. Of course, Nvidia (NASDAQ:NVDA) dominates the AI chip space currently but as AMD enters the market and acquires market share, not only will AMD increase sales and net income growth, but its market capitalization could skyrocket.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing makes the final entry on this list. This Taiwan-based contract chip manufacturer has a market capitalization of $672 billion and is poised to rise even further. The chip manufacturer dominates in terms of manufacturing capabilities and capacity. To make silicon chips more efficient from generation to generation, it’s always been about fitting more transistors on a smaller node size. TSM has been able to successfully manufacture chips at a 3-nanometer node size. It is the most advanced in the industry at this point.
Because of TSM’s prowess, companies like Apple, Nvidia, and AMD have leveraged its capabilities to construct their advanced chips. What will make TSM a $1 trillion company is the demand for AI chips. In their first-quarter earnings report for fiscal year 2024, TSM handily beat both revenue and earnings estimates. The reason was the sizable demand for advanced AI chips that has been all the craze over the past 12 months.
Riding off of this demand and its successful manufacturing competencies, TSM is probably the most likely on this list to become the next Apple, Amazon or Google in terms of market cap.
On the date of publication, Tyrik Torres 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.
