Welcome to Smart Money! My name is Eric Fry, and I’m glad you’re here.
Wall Street has sold investors on the idea that they should start with “micro” analysis – the idea that they should make investment decisions by comparing things like price/earnings ratios, income statements or other company details.
But I do the opposite; I start with “macro” analysis.
I look for big-picture trends that drive huge, multiyear moves in entire sectors of the market.
I’m talking about trends that can spin off dozens of triple- and even quadruple-digit gains in just a few years.
Catching just one of these trends – at the right time – can help anyone accumulate enough capital to finance their dreams and to provide themselves with an enviable retirement…
When investors use a global macro strategy, they identify investment opportunities from a broad, global, top-down perspective, rather than by examining stocks one by one (a micro, bottom-up perspective).
And today, I want to highlight a trend you’ve likely been hearing about nonstop for the last few years: Artificial intelligence, or “AI.”
Investors know it… and CEOs really know it. Almost no company dares to conduct a conference call without highlighting the AI technology it’s adopting or developing.
Because of the growing buzz around AI technologies, investors are rushing into AI stocks of all sorts – hoping to give their portfolios a much-needed boost.
AI is an incredibly powerful – almost scary-powerful – megatrend, and the implications of its deployment will supercharge choice companies into previously unachievable milestones… including the coveted trillion-dollar market cap.
Yes, you read that right – trillion with a “t.” It’s a wildly sizeable number, but sure enough, several companies have joined the trillion-dollar club. Some of these companies include Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), Saudi Aramco, Apple Inc. (AAPL) and Alphabet Inc. (GOOGL).
But with the power of AI, I believe that the next trillion-dollar companies are out there… and will reward their investors handsomely along the way.
So, here are my three picks for the next trillion-dollar AI companies…
Trillion-Dollar AI Stock No. 1: Teradyne Inc.
Teradyne Inc. (TER) presents a rare and timely investment opportunity, combining cyclical upside in its core semiconductor testing business with a growing robotics segment that’s rapidly gaining real-world traction, including a potentially transformative partnership with Amazon. With strong fundamentals, strategic positioning in AI-driven automation, and a healthy balance sheet, Teradyne is poised to benefit from both short-term catalysts and long-term secular growth trends.
Teradyne is a global leader in Automated Test Equipment (ATE), essential for testing advanced chips in smartphones, AI servers, automotive electronics, and high-bandwidth memory (HBM). After a cyclical downturn, the semiconductor industry is beginning a recovery, as indicated by the company’s robust first-quarter results and resurgent capacity utilization rates in the semiconductor industry.
Teradyne’s semiconductor testing revenue rose nearly 25% year-over-year in the first quarter of 2025, which signals resurgent momentum. As AI deployment drives up demand for memory and advanced chip testing, Teradyne’s testing division should continue to post double-digit revenue growth for several quarters.
But Teradyne is also a fascinating robotics play, thanks to its savvy acquisitions of Universal Robots (UR) in 2015 and Mobile Industrial Robots (MiR) in 2018. Now that these acquisitions are well integrated into the company, Teradyne is producing industry-leading collaborative and mobile robots. In fact, the robot leader, Amazon, has begun deploying Teradyne’s UR-powered robotic arms in its Vulcan robot, which it touts as a revolutionary breakthrough in warehouse automation.
Amazon stows 14 billion items a year by hand — and aims to automate 80% of that. Based on estimated deployment needs, this could mean 5,000+ Vulcan units, with potential revenue for Teradyne ranging between $600 million and $1.25 billion over time. Even a phased rollout could surpass Universal Robots’ entire current revenue. Importantly, Vulcan’s success could drive other companies to adopt similar solutions, positioning Teradyne as the premier “picks and shovels” supplier of the next wave of warehouse automation.
Teradyne’s ongoing collaboration with Nvidia is another key asset. Nvidia is integrating its Isaac platform into both Teradyne’s “universal robots,” the kind that operate alongside humans in industrial settings, and its “mobile industrial robots.” These robots can now think and react in real time, which is a necessity for chaotic environments like Amazon’s fulfillment centers. This collaboration with Nvidia gives Teradyne a major edge as AI-powered automation scales globally.
Currently, robotics contributes less than 15% of Teradyne’s revenues. But that percentage could ramp up quickly if the robotics industry enters the mega-growth phase many experts anticipate. Teradyne management has guided long-term earnings per share (EPS) to $7.00 to $9.50 by 2028, but the company’s history of conservative forecasts and industry-beating execution suggests upside potential.
If, for example, EPS reaches $11.00 by 2028 and TER trades at its historical 20X P/E, that implies a price of over $200 – or more than double its current price. If the robotics boom surprises on the upside, and Teradyne’s market share in the robotics industry grows, a $400 share price is not out of the question. As an added plus, the company boasts a rock-solid balance sheet with half-a-billion-dollars’ worth of net cash.
Teradyne offers investors rare dual exposure: a cyclical rebound in semiconductors and a secular growth story in AI-powered robotics. The company sits at the forefront of the next industrial revolution, providing essential technology for AI, automation, and robotics. With a growing pipeline, AI-powered product innovation, and a transformative opportunity with Amazon, Teradyne is a compelling play on the future of intelligent machines.
Trillion-Dollar AI Stock No. 2: PayPal Holdings Inc.
PayPal Holdings Inc. (PYPL) is a titan of the digital payments industry.
The company traces its history to the year 2000, when Elon Musk merged his online bank, X.com, with Peter Thiel’s software company, Confinity, to form PayPal. The merged entity started spinning gold almost immediately for Musk and Thiel, as the inventive pair sold the company to eBay Inc. (EBAY) just two years later for $1.5 billion.
Then in 2015, eBay spun out PayPal as a separately traded company, which it has remained ever since. (Interestingly, 2015 was also the year that Musk and Thiel partnered up again to form OpenAI, the company that would go on to create the AI sensation, ChatGPT.)
PayPal’s platform has 434 million active accounts, while the annual volume of processed payments on its platform reached $1.68 trillion last year.
PayPal’s dominant position in the “branded checkout” segment has powered most of that growth. The “PayPal/Venmo” checkout button you might see when shopping online is an example of that business. 80% of the top 1,500 retailers in North America and Europe feature PayPal in their digital wallets.
But PayPal is not taking its success for granted. The company is fortifying its market leadership by integrating leading-edge AI and machine-learning processes into key aspects of its operations. For example, the company uses AI to detect fraudulent transactions and to boost the approval rate of valid transactions.
Buy Now, Pay Later
PayPal’s growth strategy relies on three key initiatives…
- Strengthening its core “branded checkout” solution.
- Growing its “unbranded checkout” solution.
- And developing and integrating AI processes that increase merchant sales, boost customer “stickiness,” and/or reduce operating expenses.
Branded Checkout is the foundation of PayPal’s business because of its high-margin fee structure. This business segment accounts for about one-third of the Total Payment Volumes (TPVs) the company processes, but it produces more than half of its total revenues.
PayPal is the market leader in branded online checkout with 36 million merchants on that platform. Although the company does not possess the commanding 99% merchant acceptance rate of legacy credit card companies like American Express and Mastercard, it has the largest acceptance rate of any “alternative payment method” (APM) provider. This category of payment solutions includes direct debit transactions, prepaid debit cards, and eWallets like PayPal, Venmo, Google Pay, and Apple Pay.
In 2020, PayPal launched a new “Buy Now, Pay Later” (BNPL) feature to bolster the appeal of its branded checkout offering.
This credit facility is similar to what established BNPL players like Klarna, Afterpay, and Affirm offer an immediate opportunity for shoppers to finance an online or in-store purchase at the point of sale.
Despite the brief operating history of PayPal’s BNPL offering, it has made rapid strides. Since launching BNPL, PayPal has issued loans to nearly 30 million customers. In 2022 alone, PayPal processed more than $20 billion of BNPL loans – up 160% from the prior year.
PayPal’s momentum in this market should propel it to undisputed leadership… and that’s no small matter in a sector that is growing as rapidly as BNPL consumerism.
Importantly, this category of transaction delivers an outsized benefit to merchants.
As PayPal attempts to expand its presence in the BNPL market, it will benefit from one major competitive advantage. The company has preexisting relationships with a huge swathe of the target market – both the merchants and the individual consumers.
Unlike its competitors, which must win new business to establish a BNPL relationship with a merchant, PayPal can deliver BNPL capabilities as a “bolt-on” to an existing relationship.
PayPal simply incorporates BNPL functionality into the existing checkout protocol. It is not a “new sale.” PayPal added BNPL capabilities to its existing relationship with Microsoft Corp. (MSFT). Online shoppers at Microsoft’s Xbox Store can now access BNPL if they wish.
As CEO Dan Schulman explained…
Buy Now Pay Later continues to provide meaningful value to both our consumers and merchants. Over 32 million consumers have used our Buy Now Pay Later service since inception, at nearly 3 million merchants. We are now one of the most popular Buy Now, Pay Later services in the world… growing at 70% [year-over-year] on a currency-neutral basis.
Prudently, PayPal is working to “externalize” these loans by selling them to a third party, rather than retaining them on their own balance sheet. By selling the loans, PayPal removes the risk of holding bad loans.
The company took a giant step forward toward achieving that goal when it struck a deal to sell up to €40 billion of BNPL loans to the global investment firm KKR.
Under the terms of the agreement, KKR acquired PayPal’s existing European BNPL portfolio, along with future originations of eligible BNPL loans. PayPal will continue to conduct all the customer-facing activities of the loans, including underwriting and servicing.
This major transaction not only removes a large dollop of credit risk from PayPal’s balance sheet, but it also frees up capital to accelerate BNPL originations in Europe and/or to conduct shareholder-friendly activities like buying back stock.
Paving the Way
In addition to fortifying its leadership position in branded checkout, PayPal is expanding in the rapidly growing Unbranded Checkout segment.
The company refers to this solution as the PayPal Complete Payments (PPCP) platform, and it opens the door to a vast, new opportunity. Because this solution primarily serves small to mid-sized businesses, the total market opportunity is enormous. PayPal estimates the Total Addressable Market (TAM) to be roughly $750 billion.
The PPCP platform enables small businesses to accept credit cards and digital wallets as well as a range of Venmo and PayPal services. In April of 2023, PayPal gave this platform a major upgrade by adding Apple Pay to it.
That means that small businesses using PayPal as the backend for their payment processing can now accept Apple Pay alongside various other popular payment options.
Additionally, PayPal merchants can use their iPhone as a mobile point of sale terminal without the need for a dongle or other accessory device. Apple launched the technology in February of 2022.
CEO Schulman says that growing the unbranded checkout business has become a “strategic imperative” for PayPal – not just because it adds incremental revenue but also because it broadens and deepens customer relationships.
These expanded relationships produce vast troves of data that can fuel future AI enhancements.
Trillion-Dollar AI Stock No. 3: Match Group Inc.
Match Group Inc. (MTCH) is in the business of making online love connections, but the company hasn’t been able to make a love connection with investors for several years. Most of them have been “swiping left” — i.e., saying “no thanks” — on the shares of this online dating leader. But the company’s new management is engineering an AI-powered overhaul that could produce a new era of robust earnings growth.
During the last few years, the company has resembled the kind of match that goes up in flames, rather than the one that sparks romantic flames. From the peak levels of 2019, the company’s annual revenues and operating margins have both tumbled more than 20%. As a result of this grim performance, the stock price has plummeted 80%.
But the green shoots of a turnaround are starting to sprout, and I expect them to blossom over the coming months. In essence, Match’s current situation is a classic turnaround setup: a market leader with entrenched competitive advantages, temporarily out of favor due to stagnant growth, but with a clear and credible revitalization plan.
Match is the undisputed titan of online dating websites and apps, with roughly 82 million monthly active users – about 15 million of whom pay for subscriptions – and an estimated 30–40% global market share. Its portfolio includes Tinder, the world’s No. 1 dating app, along with more than a dozen other online dating brands like Hinge, OkCupid, Plenty of Fish, and Match.com.
However, despite the company’s formidable competitive moat, it has struggled in recent years to convert market leadership into profit growth. This disconnect enticed a couple of activist investors to take large positions in the company last year and begin agitating for an overhaul.
In early 2024, Elliott Investment Management, one of the world’s biggest and most prominent activist investors, revealed a $1 billion investment in Match. The company named two new directors to the board several weeks later. Shortly thereafter, Starboard Value established a 6.6% stake in the foundering online dating company.
After a lot of back-and-forth, Elliot managed to replace the company’s CEO with a hand-picked successor named Spencer Rascoff, formerly a co-founder of Zillow. Since taking over the helm seven months ago, Rascoff has wasted no time implementing a comprehensive, AI-focused overhaul. Under his leadership, the company has embraced a long-term vision where AI is not just an enhancement, but the foundational infrastructure for every aspect of the business.
Rascoff is pursuing a three-phase strategy he calls, “Reset, Revitalize, Resurgence.” The initial “Reset” phase focused on rebuilding culture, flattening management layers, and accelerating product velocity. That phase is now complete and the “Revitalize” phase is underway. That’s the interlude when products start reflecting a renewed focus on “speed, accountability, and relentless product execution.” If all goes well, the “Resurgence” phase will flower in 2026 and 2027.
AI is central to this entire strategy.
Match’s AI Upgrade
On the consumer side, Rascoff is deploying AI to reshape Match’s most important brands, Tinder and Hinge. At Hinge, for example, a new AI-powered recommendation algorithm launched in March 2025 has increased matches and contact exchanges by 15%. This meaningful improvement translates into more real-world dates and higher rates of payer conversion.
Additionally, the “onboarding” process at Hinge now offers generative AI tools to help users create their profiles. These tools provide real-time feedback on profile prompts to reduce generic answers and encourage more authentic, high-quality responses. Later in 2025, Hinge plans to launch AI “coaching” features such as “Warm Intros,” which highlight meaningful profile details, and AI-generated conversation starters to help users “break the ice” and sustain more engaging chats.
On the Tinder app, which is facing sharp user declines, Match is introducing an even broader suite of AI tools. This AI-enabled upgrade is prioritizing deeper compatibility and better user outcomes, rather than optimizing for superficial swiping or other short-term engagement metrics.
The new “Daily Drop” feature, for example, is a matching system that delivers personalized recommendations designed to break the monotony of swipe-based interactions. Early tests in New Zealand are promising, and a global rollout is planned before year-end. Another new feature, “Double Date,” enables group dating. This feature, which launched globally in June, has become an instant hit, especially among young female users. As Rascoff explains…
[It gives] users a new social way to connect as a pair. Rolled out six months ahead of schedule, it’s showing strong early traction, with 92% of Double Date users being under 30. Women who are pairing up are three times more likely to send a like and four times more likely to match compared to when using Tinder solo.
AI is also improving trust and safety on Tinder – a major Achilles heel. New detection models can identify bots and scammers with higher accuracy. Match has also introduced AI-powered facial verification tools that increase authenticity and trust. The company is even testing ad campaigns that highlight these safety features, with plans to measure and improve public perception.
While these consumer-facing initiatives are critical to user growth and retention, Match is also using AI to transform its internal operations, making the company more efficient and more collaborative. For example, Match has deployed AI coding assistants like “Cursor” globally to speed up development cycles and reduce engineering workloads.
Additionally, nearly 1,000 engineers now collaborate via a shared GitHub repository supported by AI-enabled tools, giving teams across different brands visibility into each other’s code and fostering the reuse of successful features. This infrastructure-first approach mirrors strategies used by larger tech firms like Meta and Microsoft, where platform-level AI capabilities create sustainable advantages in speed, consistency, and scalability.
Match has also created a centralized AI tooling group that builds and maintains shared AI infrastructure. This approach gives smaller brands in the company’s portfolio, like HER or The League, access to the same advanced capabilities as the flagship apps without having to duplicate engineering efforts.
By embedding AI at multiple touchpoints – from onboarding and match recommendations to internal product development – Match is building a unified ecosystem where data, technology, and human creativity reinforce each other. This dual focus on consumer experience and operational efficiency is not simply an experiment; it is the strategic foundation for the company’s revitalization plan.
Although this prospective turnaround is just getting under way, it is showing early signs of traction. Year-over-year declines in registrations and monthly active users have begun to moderate, and engagement metrics such as reciprocal chats and contact exchanges are improving.
Additionally, the growth trajectory at Hinge continues to gain momentum. During the second quarter, the brand’s revenues jumped 25% year-over-year, while its user base increased 15%. There’s a lot of blue sky over those numbers, now that Match is exporting Hinge to dozens of new countries. At present, Hinge operates in only 25 countries, compared to Tinder’s 188-country footprint.
Looking down the road, Rascoff declares, “We are operating like a company that is just getting started, and we believe the best chapters of this category and company are still ahead.”
Even though Match falls squarely into the “turnaround play” category, the down-and-out version of Match was never particularly down or out. Yes, Tinder’s active users slumped for several quarters, and company revenue dipped from peak levels. But even so, the company maintained high profitability, robust free cash flow, and a commanding global market position.
Match remains the category leader that possesses an enviable scale advantage. In the age of AI, that scale confers a powerful strategic asset: the data generated by millions of daily interactions. Match’s rich, real-time behavioral dataset offers an unmatched training ground for advanced machine learning models. This is exactly the lever Rascoff is now pulling to rebuild growth.
Financially, Match remains on solid ground. Free cash flow has consistently ranged between $800 million and $900 million annually during the last five years, with only a brief dip in 2022. The company’s net debt has been trending lower for several years and cash generation remains strong, which gives Match the flexibility to invest in AI initiatives, marketing, and new app development without risking a flameout.
Assuming the new AI-led initiatives can stabilize and then grow Tinder’s user base, while Hinge continues its strong growth trajectory and international expansion, Match shares could mount a substantial rally.
Moving Forward
I’m so glad that you decided to further your journey to wealth by joining Smart Money.
Nearly every Monday, Wednesday, Thursday, and Saturday, you’ll receive an email from me, wherein I’ll share insights on the latest market “megatrends”, how to act on them and more.
Get started by visiting your Smart Money website here.
Regards,
Eric Fry
Editor, Smart Money
