Prediction: 3 Stocks That Will Be Worth More Than Apple 3 Years From Now

apple (AAPL 1.30%) The company recently became the world’s most valuable company again, with a market capitalization of $3.57 billion, and its shares have risen more than 60% over the past three years, despite tough macroeconomic and competitive headwinds and declining iPhone sales.

Analysts expect Apple’s revenue to grow at a compound annual growth rate (CAGR) of 5% and its earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 10% from fiscal 2023 (ended last September) through fiscal 2026. This growth is likely driven by a cyclical recovery in iPhone sales, expansion into high-growth markets such as India, and the evolution of Apple’s subscription ecosystem, which has more than 1 billion subscribers. Apple is also likely to buy back tens of billions of dollars’ worth of stock each year to boost EPS.

These growth rates are Stable long-term investmentBut that’s a bit weak for a stock trading at 35 times earnings. Future earnings And it’s 9 times this year’s sales. So Apple’s valuation may have been inflated by recent hype about its plans for generative AI for its apps. Assuming Apple meets Wall Street’s forecasts and trades at the same price-to-sales multiple through fiscal 2026, its market cap could increase by about 12% to $4.01 billion by the end of the year.

That market cap still makes Apple one of the most valuable companies in the world, but I would say that three of its peers have a trillion-dollar market cap. NVIDIA (NVDA 1.44%), Microsoft (MSFT -0.25%)and alphabet (Google -0.28%) (Google -0.27%) — is likely to surpass that valuation over the next three years.

Key differences between these tech giants

Apple, Nvidia, Microsoft and Alphabet all operate different business models: Apple gets more than half its revenue from iPhones but relies on its services business for most of its growth, while Nvidia gets most of its revenue from selling high-performance data centers for processing. AI Tasks.

Microsoft generates more than half of its revenue from its cloud businesses, including its Azure cloud infrastructure platform, Office 365 productivity services, and Dynamics customer relationship management (CRM) services. Alphabet, meanwhile, generates the majority of its revenue from its Google advertising business, which includes search advertising, display advertising, its ad network, and YouTube. But its smaller Google Cloud business is growing at a much faster pace than its core advertising business.

All four companies are expanding their generative AI ecosystems: Apple recently integrated OpenAI’s ChatGPT into its apps and announced new generative AI features for image creation and text creation, while Microsoft, OpenAI’s largest investor, is integrating the startup’s generative AI tools into its cloud-based services.

Alphabet is upgrading its Gemini generative AI platform to catch up with OpenAI and deploy its tools across its ecosystem. Nvidia is cashing in on this mundane trend by selling the perfect “picks and shovels” for the AI ​​gold rush.

All three tech giants are growing faster than Apple

But of those four, only Apple gets most of its revenue from the slow-growing, cyclical consumer electronics business. Nvidia is a fast-growing chipmaker, Microsoft is a cloud and AI company, and Alphabet is a digital-advertising company. That’s why analysts expect all three to grow faster than Apple over the next three years.

Data source: MarketScreener.

Assuming all three perform as expected and their price-to-sales multiples remain stable, NVIDIA could reach a market cap of $5.3 trillion by fiscal year 2027 (ending January 2027), Microsoft could reach a market cap of $4.5 trillion by fiscal year 2026 (ending June 2026), and Alphabet could reach a market cap of $3 trillion. However, at the same price-to-sales multiple as Microsoft, Alphabet’s market cap could reach nearly $6 trillion. Thus, all three tech giants could surpass Apple’s market cap over the next three years.

But beyond market capitalization

While it’s interesting to track the market capitalization of the world’s largest companies, it’s a superficial approach that ignores the core strengths and weaknesses of the companies.

All four of theseThe Magnificent Seven“Stock prices will continue to grow. Apple is a solid investment in the mobile computing market, Microsoft and Google are evolving into cloud and AI companies, and Nvidia remains the best pure player in the AI ​​accelerator chip market. So instead of wondering which tech giant will be most valuable in three years, investors should simply focus on their ability to expand their ecosystems, widen their defenses, and generate consistent growth.