Two Tech Stocks That May Join Nvidia in the $3 Trillion Valuation Club

In recent years, Nvidia has emerged as a standout performer in the tech sector, especially benefiting from the artificial intelligence (AI) surge. The company's stock has skyrocketed by over 820% since 2022, boasting a market capitalization of nearly $3.3 trillion, which places it just behind Apple's $3.5 trillion valuation.

However, other tech giants are also on the verge of remarkable growth and might soon join Nvidia and Apple in reaching the coveted $3 trillion club. Here are two such companies.

1. Amazon

Amazon (AMZN) has delivered outstanding returns for investors over the past few decades, and its momentum shows no signs of slowing down. With the stock doubling in value over the last five years, Amazon currently has a market cap of around $2 trillion. Given the company's ongoing opportunities, it is projected that the stock could see a 50% increase in the coming years, pushing its total market cap to $3 trillion.

Amazon has been working hard to reduce operational costs linked to delivering countless orders each year. For the first time since 2018, the company managed to lower its cost to serve retail customers this year. Innovations in delivery routes have enabled Amazon to enhance efficiency, leading to a doubling of its operating profit over the last year.

These cost-cutting strategies not only boost short-term profits but also empower Amazon to capture more market share by offering competitive prices on various goods. Improved transportation methods result in quicker delivery times, encouraging more frequent purchases. Currently, Amazon holds a remarkable 37% share of the U.S. e-commerce market, six times that of its closest competitor, Walmart.

With plans for greater automation and an expanding same-day delivery network, Amazon continues to solidify its leadership position in the industry. Analysts anticipate that the company's earnings will reach $7.30 per share by 2026, reflecting a 52% increase from 2024 estimates. Therefore, investors are optimistic that Amazon's stock will rise in tandem with its earnings growth, potentially leading to a $3 trillion market cap within the next two years.

2. Alphabet (formerly Google)

Alphabet (GOOG, GOOGL) has also impressed investors in recent years, with its stock doubling in value over the past five years, resulting in a market cap around $2 trillion. This puts Alphabet within striking distance of Nvidia's valuation.

While Amazon Web Services dominates the cloud service sector, Alphabet's Google Cloud is steadily gaining traction. The company is increasingly attracting enterprise clients with its growing portfolio of AI services, which is driving its marketshare further.

Recent growth in Alphabet's cloud business can be attributed to a robust demand for AI infrastructure and generative AI services. With revenue surpassing $10 billion in the second quarter, the operating profit for Google Cloud also tripled, indicating that Alphabet is generating significant returns on its investments in AI tools offered to clients, such as Vertex and the Gemini AI model.

Moreover, Alphabet manages to invest heavily in cloud services and AI while simultaneously witnessing solid earnings growth. In the second quarter, the company's earnings grew by 31% year over year, with analysts projecting a 16% long-term growth rate. By 2026, earnings estimates suggest Alphabet could reach $10 per share. Should Alphabet trade at the market average price-to-earnings ratio of approximately 27, its stock price could reach $270, representing a possible upside of 62% and positioning it for a $3 trillion market cap within two years.

This momentum from both Amazon and Alphabet illustrates the dynamic landscape of the tech market. As these companies evolve and adapt to new trends, they may find themselves joining Nvidia in a high-value club.

stocks, technology, growth