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Discover the Next Growth Titan Poised to Compete with Apple, Nvidia, and Microsoft for $3 Trillion Status by 2029

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From Giants of the Past to Tech Titans: A Look at Amazon’s Path to $3 Trillion

The Shift in Market Leadership

In the past 20 years, the landscape of top companies has dramatically changed. Back in 2004, the market leaders were industrial and energy giants General Electric and ExxonMobil, valued at $319 billion and $283 billion respectively. Fast forward to 2024, and technology has taken center stage.

Three major tech players now dominate the market. Apple is at the forefront with a staggering market cap of $3.4 trillion. Close on its heels are Nvidia and Microsoft, valued at $3.1 trillion and $3 trillion, respectively.

Amazon’s Growth Journey

At a current market cap of $1.9 trillion, Amazon (NASDAQ: AMZN) may appear to be a bit shy of entering the $3 trillion club. Yet, the stock has surged by 42% over the past year and an impressive 109% over the last five years, indicating a trend that could continue.

With recent economic improvements, Amazon’s solid market position, and its strategic adoption of artificial intelligence (AI), the company is well-positioned for further growth.

A person staring at graphs and charts on a computer monitor.

Image source: Getty Images.

Strong Quarterly Performance

Recent years have posed notable challenges, including an economic downturn driven by high inflation rates. Recently, however, consumer sentiment improved significantly, reaching a five-month high by September, coinciding with the Federal Reserve’s interest rate cuts.

This positive economic environment is benefiting Amazon, which saw its net sales reach $148 billion in the second quarter, a 10% year-over-year increase. Diluted earnings per share (EPS) of $1.26 almost doubled during the same period.

All major operating segments contributed to these impressive results. Online sales in the U.S. rose by 9%, while international sales grew by 7%. Notably, Amazon Web Services (AWS), the cloud computing division, experienced a remarkable 19% growth—the highest rate since late 2022. Advertising, the company’s fastest-growing segment, also saw a 20% increase as Amazon aims to be a significant player in the advertising market.

Pioneering E-commerce and Cloud Computing

Amazon is a pivotal force in e-commerce, a space it effectively pioneered. The company captured 38% of U.S. digital retail sales last year, surpassing the combined total of its next 15 competitors, according to data from eMarketer. It’s expected to further enhance its dominance in 2024, capturing 40% of U.S. online sales this year.

AI has always been a cornerstone of Amazon’s strategy, aiding in everything from customer product recommendations to inventory management. The company employs AI-powered robots in warehouses and uses advanced algorithms for efficient delivery routing.

AWS also stands out as a leader in cloud computing, holding 33% of the market as of the second quarter, with Microsoft Azure and Alphabet‘s Google Cloud following at 20% and 10% respectively, as noted by research firm Canalys. Its extensive library of AI models fuels its cloud growth further.

Additionally, Amazon’s advertising business leverages its platforms, including its e-commerce site, Prime Video, and Twitch, ensuring targeted ad placement. This segment has been the company’s fastest-growing area for several years.

The Road to a $3 Trillion Valuation

Amazon’s market cap stands at approximately $1.9 trillion, indicating that a 57% stock price increase is necessary to reach a valuation of $3 trillion. Analysts predict Amazon will generate revenue of $635 billion in 2024, resulting in a forward price-to-sales (P/S) ratio of about 3. This means the company would need to grow its revenue to around $998 billion annually to feasibly support a $3 trillion market cap.

Wall Street estimates a revenue growth rate of 11% per year over the next five years for Amazon. If achieved, this could enable the company to reach the coveted $3 trillion mark by as early as 2029. It’s important to note that Amazon’s revenue has surged nearly 400% over the past decade, suggesting that such growth projections could be conservative.

Furthermore, Amazon is currently valued at roughly 3.2 times sales, slightly below its five-year average of over 3.3, making it an appealing option for investors looking for growth potential.

A Second Chance at Significant Returns

If you’ve ever felt you missed out on investing in some of the top-performing stocks, there’s still an opportunity on the horizon.

Our analysts occasionally highlight a “Double Down” stock, suggesting companies poised to make significant gains. If you’re concerned you’ve missed your chance, now might be the perfect time to invest:

  • Amazon: A $1,000 investment when we doubled down in 2010 would have grown to $20,855!*
  • Apple: A $1,000 investment in 2008 would now be worth $43,423!*
  • Netflix: A $1,000 investment in 2004 would be worth $392,297!*

We’re currently issuing “Double Down” alerts for three exceptional companies, and opportunities like this might not come again anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.

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