The Rise of Big Tech: Will Nvidia, Microsoft, or Apple Reach $4 Trillion First?
The United States’ big tech giants have been on a remarkable run, with Nvidia, Microsoft, and Apple all surpassing the $3 trillion market capitalization mark. Google and Amazon are hot on their heels, with market caps in the $2 trillion range. This phenomenon has left many experts wondering which tech giant will be the first to reach the next big milestone: $4 trillion.
The Current State of Big Tech
Combined, the five tech giants (Nvidia, Microsoft, Apple, Google, and Amazon) are now worth more than $14.5 trillion, making up roughly 32% of the S&P 500. In 2002, after the dot-com bubble burst, the total market capitalization of every U.S. stock was $11.1 trillion. Big tech’s performance has been particularly impressive this year, with Nvidia, for example, surging from a $2 trillion market cap to a $3 trillion market cap in under 100 days.
The Question on Everyone’s Mind: Which Tech Giant Will Reach $4 Trillion First?
Some bears argue that big tech companies’ record run of performance can’t continue forever, given their elevated valuations and the slowing economy. However, the bulls believe this is just the beginning of a streak of AI-induced wins for big tech. Wedbush tech analyst Dan Ives predicts that Nvidia, Apple, and Microsoft will be the first to reach $4 trillion, with Nvidia potentially hitting the mark first.
Nvidia: The Front-Runner?
Nvidia’s market capitalization has surged roughly 160% year to date and more than 3,000% over the past five years. The company’s AI-enabling hardware has been in high demand, and many experts believe it will continue to be the dominant player in this space. However, some analysts warn that Nvidia’s valuation has become stretched, and doesn’t account for rising competition in the semiconductor market.
Microsoft: The Sustainable Option?
Microsoft’s booming cloud business and big investment into ChatGPT creator OpenAI have buoyed its shares over the past few years. The company’s diverse and sustainable revenue streams, including its Azure cloud computing business and Office 365, make it a strong contender to reach $4 trillion. Tim Pagliara, founder and chief investment officer of independent wealth management firm CapWealth, believes Microsoft will be the more sustainable $4 trillion company.
Apple: The Long-Term Play?
Apple’s potential to use AI to get customers to upgrade their current phones and lure in more iPhone customers makes it a strong long-term play. The company’s massive base of customers, with over 2.2 billion iOS devices, provides a significant opportunity for growth. However, Apple may not be the first to reach $4 trillion, but it will get there soon, according to Ives.
What About Alphabet and Amazon?
Alphabet’s market cap is currently $2.36 trillion, leaving it well shy of the $4 trillion mark. Analysts say Alphabet will be able to capitalize on the AI revolution, but its missteps with hallucinations have left it behind, and its cloud business isn’t performing as well as others. Amazon, which just recently passed the $2 trillion milestone, is expected to take time to reach $4 trillion, with experts predicting it will need to make significant changes to its cloud business and AI strategy.
Conclusion
The rise of big tech has been nothing short of remarkable, with Nvidia, Microsoft, and Apple all reaching $3 trillion market capitalization. While some bears argue that big tech’s record run of performance can’t continue forever, the bulls believe this is just the beginning of a streak of AI-induced wins for big tech. As the tech giants continue to innovate and adapt to the changing landscape, it’s clear that the future of big tech is bright.
FAQs
Q: Which tech giant will reach $4 trillion first?
A: Nvidia, Microsoft, and Apple are all potential candidates, with Nvidia potentially hitting the mark first.
Q: What is driving the rise of big tech?
A: The AI revolution and the health of the U.S. economy are driving the rise of big tech.
Q: Are there any risks associated with big tech?
A: Yes, antitrust regulations, cyber attacks, a slowing economy, and a reduction in AI spending are all potential risks.
Q: Will big tech’s record run of performance continue?
A: The bulls believe this is just the beginning of a streak of AI-induced wins for big tech, while the bears argue that big tech’s elevated valuations and the slowing economy will eventually catch up with them.
Author: fortune.com
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