s of this writing, there are five U.S. companies with market capitalizations of $1 trillion or higher: Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon.com (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG), and NVIDIA (NASDAQ: NVDA). But it’s fair to say that the trillion-dollar club could become a bit less exclusive as time goes on.
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To be sure, there are plenty of companies that could potentially reach a $1 trillion valuation by the end of the decade. Twenty U.S.-listed stocks currently have market caps of $300 billion or more, and there’s a solid case to be made for most of them, especially if the stock market performs well. But here are three in particular that could have a particularly excellent shot at a $1 trillion valuation by 2030.
A trillion-dollar conglomerate
To be fair, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is the least bold prediction on this list. With a current market cap of about $765 billion, getting to $1 trillion by the end of the decade would require 4.2% annualized returns, while Berkshire has a clear history of beating the stock market handily. In fact, it would be somewhat disappointing if Berkshire only reached $1 trillion by 2030.
There are a few reasons why Berkshire should relatively easily join the trillion-dollar club. For one thing, the company is a natural compounding machine, generating billions of dollars every quarter that can be reinvested as management sees fit. Its stock portfolio alone is worth $381 billion and should at least match the market’s historical 9% to 10% annualized returns over the long run. Plus, with more than $130 billion in cash on its balance sheet, Berkshire actually has an advantage if a recession hits in the near term, as it should allow Warren Buffett and his team to take advantage of bargains in the market.
The war on cash rages on
With a $483 billion market cap, Visa (NYSE: V) would need to achieve a 11.8% annualized total return in order to reach $1 trillion before 2030. And based on the recent growth of the business, as well as the massive market opportunity in cashless payments, it could certainly make this happen.
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In the most recent fiscal quarter, Visa’s revenue grew by 12% year over year, fueled by strong growth in cross-border volume. Earnings per share (EPS) increased by 9%, and keep in mind that this is with a rising rate environment and expected recession on the horizon. Visa currently has about $12.5 trillion in annualized-payment volume flowing through its network, but the company has cited a $185 trillion opportunity, including markets like person-to-person and business-to-business transfers that Visa largely hasn’t tapped into yet.
The first trillion-dollar bank?
JPMorgan Chase (NYSE: JPM) is the “smallest” company on this list with a $460 billion market cap, which means it would need to produce annualized growth of approximately 12.7% to join the trillion-dollar club by 2030.
This could certainly be achievable. After all, the company has a strong record of smart lending and excellent growth. Over the past 10 years, the bank stock’s market cap has grown by 115%, and this was in a mainly low-interest environment that kept net-interest income at a minimal level. Plus, recent moves such as the acquisition of failed First Republic Bank at excellent terms should help boost returns going forward.
All are realistic trillion-dollar candidates
None of these are particularly bold predictions. All are excellent businesses with top-quality management teams and lots of room to grow in the years to come. While there is no way to know for sure what will happen in the economy and stock market between now and then, all three of these stocks are in excellent positions to produce strong long-term returns for investors.
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