It is becoming easier to get into the $1 trillion market-cap club. SK Hynix and Micron Technology now belong because of the demand for memory chips. SK Hynix’s 12-month stock price jump reached 1000%. The two joined Samsung, which was recently added to the list.
The $1 trillion plus list has 14 members. (The club had only one member in 2018, and that was Apple.) Currently, the companies with $1 trillion-plus market caps are SK Hynix, Micron, Samsung, Berkshire Hathaway, Meta (NASDAQ: META | META Price Prediction), Tesla, Saudi Aramco, Broadcom, TSMC, Amazon (NASDAQ: AMZN), Alphabet, Microsoft (NASDAQ: MSFT), Apple, and Nvidia (NASDAQ: NVDA). Together, their market caps are about $35 trillion, which is slightly more than America’s GDP.
How did we get here? AI. The only two companies in the $1 trillion market-cap club that hardly touch AI are Berkshire Hathaway and Saudi Aramco. Saudi Aramco was founded in 1933 as California-Arabian Standard Oil. Berkshire Hathaway was founded by Warren Buffett in 1965. Actually, Berkshire Hathaway’s predecessors date back to 1929.
The trillion club raises the question of whether an entirely new industry, with the skyrocketing growth of AI, is worth the money. These 12 companies in the club are only the tip of the iceberg in terms of valuation. The total must be well into the tens of trillions of dollars. Simply look at two private companies–OpenAI and Anthropic–each of which has a valuation of nearly $1 trillion (OpenAI will not make money until 2030)
The trillion club is based on two factors. The first is that AI adoption will reach the universal stage of individual human use. This might happen if Elon Musk’s plan for every human to have a humanoid robot comes true. It is more likely that the use of AI will move worldwide without robots. And, much of this distribution will happen because the applications will be free. And enterprise and government adoption will also need to be nearly universal. The road to this paid adoption already seems well-traveled today.
The trillion club also shows why there is a risk of a massive stock market collapse. Only one huge company will need to falter in terms of expectations, and what might be a house of cards would tumble as fast as overnight. The clear candidate for this is Nvidia. Its stock is up 1268% in the last five years. It is at the absolute center of the industry.
Senator Everett McKinley Dirksen once said, “A billion here, a billion there, pretty soon you’re talking real money.” He spoke of the federal government. Today, that might as well be AI.
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