The race to $4 trillion is on. Microsoft (NASDAQ:MSFT), and Nvidia (NASDAQ:NVDA) are members of the $3 trillion club, while Apple (NASDAQ:AAPL) just fell out of the club following its Monday plunge of nearly 2%.
So, which technology behemoth can adapt to keep growth rates elevated enough to keep the good times going? Undoubtedly, Nvidia’s blistering triple-digit sales growth puts the GPU kingpin on another planet.
This initial artificial intelligence (AI) accelerator gold rush will cool down. And when it does, questions linger about the kind of sustained growth rate that Nvidia will settle into. If there is a downturn in the future, it will be almost impossible to time.
While triple-digit growth is simply unsustainable, perhaps Nvidia has a few more upside surprises in store for those holding on at today’s meteoric highs.
After all, many analysts have been guilty of underestimating the company in the past three years. Whether they’re continuing to underestimate the magnitude of the boom remains the $4 trillion question.
Apple (AAPL)
How could Apple be the first to hit a $4 trillion valuation when the firm has been outrun by Microsoft and Nvidia of late?
Though many consider Apple to be an underdog in the race to $4 trillion, the worst of the company’s iPhone sales hiccups may have already passed. As interest rates begin to fall, perhaps more discretionary income in consumers’ pockets will give way to a splurge on new devices.
If anything, the latest iPhones, iPads and Macs are not discretionary goods anymore, not when they can run Apple Intelligence using Apple’s hybrid approach to AI computing.
Additionally, some notable bulls are out following Apple’s big WWDC day, including Deepwater Asset Management’s Gene Munster. Recently, the latter sat down with CNBC to share his thoughts. He thought the first day of WWDC 2024 (June 10) was the biggest day for Apple since 2007, the day Apple unveiled the first iPhone.
If Munster is right, Apple could find itself at a $4 trillion market cap. That’s just a 36% rally for AAPL stock from here, which is totally attainable given the soft year-to-date (YTD) rally of just 4%.
Microsoft (MSFT)
Microsoft is technically the closest to hitting that $4 trillion market cap mark. At writing, the stock is sitting at just north of $3 trillion. The road to $4 trillion may be less traveled for Microsoft at current levels. Yet, it would be a mistake to discount the potential for Nvidia or Apple to make a second-half sprint to such a finish line.
In any case, some smart analysts see Microsoft rising to a valuation of $4 trillion, thanks in part to its drivers that span well beyond generative AI.
Most notably, the Azure cloud business, which stands to benefit from greater AI usage as a whole, could be next in line to excite. Pierre Ferragu of NewStreet Research thinks a $4 trillion valuation makes sense as Microsoft seeks “achieving the Nirvana of execution.” That entails “higher profitability” and “rapid and steady market share gains.”
Truly, fast and steady may ultimately win the market cap race. And MSFT stock has the best shot at rallying enough to mint Microsoft as the first to break a $4 trillion valuation. A gain of around 26% from today’s close will do it.
Nvidia (NVDA)
Nvidia is probably the favorite pick for many to hit the $4 trillion valuation level first. At around $3 trillion, it will take a surge of just over 33% to hit the level.
NVDA stock has rallied more than 35% in just the past month. If AI enthusiasm continues, Nvidia could be flirting with $4 trillion in a matter of weeks. Of course, just how much exciting news can flow in for the summer when we’ve already had so much to admire in the first half?
Already, Nvidia is thinking years ahead with its Rubin platform for 2026. It’s not just the GPU that has investors’ attention. It’s the next-generation Vera chip built on the Rubin platform that could capture the world by storm.
There’s only one problem with the Rubin news. It’s likely already (mostly) baked in, and we’re going to have to wait more than a year and a half before the chip launches. That’s a long wait. And NVDA stock could certainly consolidate until Rubin launches.
Finally, Rubin’s hype may bring forward a bit of excitement and upside this year, perhaps taking away from NVDA stock’s future performance. Whether it’s enough to sustain a 2024 push to a $4 trillion market cap remains to be seen.
On the date of publication, Joey Frenette held shares of Apple and Microsoft. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
