Investing

3 Trillion-Dollar Stocks to Buy Now

AndreyKrav / iStock Editorial via Getty Images

The U.S. stock market boasts a combined market cap of $50.8 trillion, as of early 2024. But the wealth is concentrated, with a select few names earning the right to be called trillion-dollar stocks. Perhaps not too surprisingly, all of the companies that qualify also share the title of tech titans (except for Saudi Aramco).  

The following trio of multi-trillion-dollar stocks represents companies whose products have become embedded in the lives of people around the globe. Whether it’s the iPhone, internet search or AI chips, all three companies have disrupted the status quo and changed the world. But it’s not just about where they’ve all been. It’s also about where they’re headed, and all three of them are locked into AI, the societal effects of which Google chief Sundar Pichai predicts will be bigger than electricity or fire.    

While there’s a case to be made that tech valuations are overheated, there’s also reason to argue these levels are warranted. Two out of the three mega-cap stocks have P/E ratios below 30, and they’re all generating profits hand over fist. Besides, growth stocks don’t come cheap; they never have. Investors agree to inherit more risk in exchange for the potential of greater rewards in the form of a rising share price.

Lately, things have mostly gone their way as market caps have ballooned to new heights. But with the type of earnings Big Tech has been generating, not least owing to the frenzy around AI, we believe these multi-trillion-dollar stocks are uniquely positioned for even more growth and would be a valuable addition to any portfolio. 

Alphabet: $2.15T

Source: JHVEPhoto / iStock Editorial via Getty Images
JHVEPhoto / iStock Editorial via Getty Images
  • Market Cap: $2.15 trillion 
  • P/E Ratio: 25.53 (forward)
  • Stock Price: $171.95

Alphabet’s (Nasdaq: GOOGL) market cap recently crossed the $2 trillion threshold for the first time after reporting blowout first-quarter results. The tech giant, which is Google’s parent company, grew its Q1 revenues by 15% to $80.5 billion, the biggest sales increase it’s seen in two years and fueled by the cloud business. Additionally, Google’s ad sales are booming. 

While Alphabet has several business segments, including Google Services, Google Cloud and Other Bets, it is transforming more into an AI company every day. Last year, the company introduced DeepMind, a division under which AI-related activities are now reported.

Alphabet’s AI journey hasn’t always been smooth as it has navigated its role in a market filled with generative-AI chatbots that compete with search. But with a war chest that’s predicted to hit an all-time high of $83 billion this year, per Bloomberg, Alphabet can afford some trial and error.

With Q1 net income rising over 50% to $23.7 billion, Alphabet’s board in a bid to appeal to income investors initiated a $0.20 per share cash dividend after the earnings glow. Additionally, they announced the revival of a $70 billion share buyback program. Alphabet is the latest tech company to wade into dividend waters of late after Facebook parent Meta (Nasdaq: META) announced a cash distribution of its own earlier this year. 

Now that Alphabet has opened the dividend door, there’s no closing it. Morgan Stanley analysts recently said growth stock investors will expect tech companies initiating dividends not only to maintain payouts but grow them, too. Meanwhile, Alphabet spent $12 billion in capex last quarter, a pace it expects will persist for the foreseeable future.

Wall Street has taken notice. JPMorgan says Google has gone on “offense” around AI in areas like search, a pivotal shift that will make all the difference. While GOOGL stock is trading at a fresh all-time high, the company appears positioned to ride the AI wave for years to come.

Nvidia: $2.19T

Nvidia
Source: BING-JHEN HONG / iStock Editorial via Getty Images
BING-JHEN HONG / iStock Editorial via Getty Images
  • Market Cap: $2.19 trillion 
  • P/E Ratio: 36.4 (forward) 
  • Stock Price: $877.35 

With a market cap of $2.19 trillion, Nvidia (Nasdaq: NVDA) has gained a reputation as the AI darling in investment circles. As one of the most heavily traded stocks on Wall Street, having recently muscled Tesla (Nasdaq: TSLA) out of position, investors can’t seem to get enough of this chip stock. Nvidia boss Jensen Huang had the foresight to recognize the potential of the company’s graphic cards when they were mostly powering video games. Now they are the most sought after hardware products for AI applications. 

After crossing the $1 trillion market cap mark for the first time in 2023, Nvidia followed up that performance less than a year later by surpassing the key $2-trillion level, never looking back. Last year, Nvidia more than doubled its revenue to $60.9 billion, fueled by AI demand, and is on track for another blockbuster performance amid a coming generation of chip sets whose price tag rivals the cost of a new Tesla. 

Nvidia’s shares are trading at approximately 36 times expected earnings after trading roughly twice as high a year ago. Wall Street remains bullish on revenue and net income projections as is Huang, as the company continues to buy back billions of dollars in shares and reward investors with a $0.16 annual dividend. You might not get too many more opportunities to buy this trillion-dollar stock before it goes even higher, fueled by two key catalysts – AI and earnings.

Apple: $2.6T

Source: PhillDanze / iStock Editorial via Getty Images
PhillDanze / iStock Editorial via Getty Images
  • Market Cap: $2.6 trillion 
  • P/E Ratio: 25.8 (forward)
  • Stock Price: $169.30

As the second most valuable company in the world, Apple (Nasdaq: AAPL) has a market cap of $2.6 trillion, surpassed only by software behemoth Microsoft (Nasdaq: MSFT). But Apple has the distinction of having been crowned the first trillion-dollar company in the stock market after crossing the finish line in 2018 before the rest of the Magnificent Seven pack. In 2021, Apple crossed the $3 trillion market cap threshold though it has been tough to make it stick.

Apple’s stock has retreated 12% year-to-date, giving investors an opportunity to scoop up shares. Considering the average Wall Street price target is $200, which is also about the stock’s 52-week high, there’s reason to be bullish on Apple stock. Investors who are willing to be long-term holders in Apple stock, which pays a quarterly cash dividend of $0.24 per share, aren’t likely to be as rattled by any near-term volatility in shares.

Apple’s AI story is still unfolding, but it could be hitting a stride. The company is reportedly in discussions with generative AI pioneer OpenAI to integrate the ChatGPT algorithm into the iPhone’s chatbot. Apple is also considering Google’s Gemini technology, according to reports. Apple’s presence in the AI field could be felt as soon as mid-2024 when the company’s first generative AI product is expected to make its debut. As one of the most disruptive companies in the world, investors won’t want to count Apple out of the AI bonanza nor ignore the stock in their portfolios.

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