The trillion-dollar club is an elite group consisting of only six companies valued at US$1 trillion or more.
Five of these powerhouses are traded on U.S. exchanges, including Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG), Amazon.com Inc (NASDAQ: AMZN), and NVIDIA Inc (NASDAQ: NVDA).
The sixth member, Saudi Arabian Oil Co (SAR: 2222), is listed on the Tadawul, Saudi Arabia’s stock exchange.
These rare trillion-dollar companies represent a minute fraction of the global business landscape, prompting investors to continuously search for the next contenders to this prestigious league.
In this article, we explore three stocks that exhibit the potential to join the trillion-dollar club, considering their market capitalization and growth prospects.
1. Berkshire Hathaway: Current market cap of US$736.61 billion
With a current market cap of US$736.61 billion, conglomerate Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) emerges as the prime contender to achieve the coveted trillion-dollar market cap milestone.
Led by the legendary billionaire investor Warren Buffett since the mid-1960s, Berkshire Hathaway boasts an impressive track record.
Over nearly six decades, the company consistently outperformed the S&P 500’s annualized total return, including dividends.
While past performance cannot guarantee future results, Buffett’s ability to surpass Wall Street’s expectations has been a reliable bet, with a remarkable 19.8% return for its Class A shares (BRK.A) compared to the S&P 500’s 9.9%.
One of Berkshire Hathaway’s key success factors lies in Buffett’s strategic inclusion of cyclical companies in the company’s investment portfolio and owned assets.
By aligning with the ups and downs of the U.S. economy, Berkshire Hathaway capitalizes on extended periods of economic expansion, ultimately benefiting from multi-year bull markets.
2. Tesla: Current market cap of US$836.68 billion
Tesla Inc (NASDAQ: TSLA), the electric vehicle (EV) giant, stands as another prominent contender for the trillion-dollar club, boasting a current market cap of US$836.68 billion.
With its visionary CEO Elon Musk at the helm, Tesla has witnessed a remarkable rebound, more than doubling its share price year-to-date after a challenging 2022.
Musk, while acknowledging potential economic headwinds in the near term, remains optimistic about Tesla’s long-term prospects.
As a pioneer in mass EV adoption, Tesla is well-positioned to leverage the shift towards electric vehicles.
The company enjoys a dedicated fan base, utilizing their loyalty to drive sales as production ramps up to potentially reach close to 2 million vehicles in 2023.
Tesla has also unveiled plans to explore marketing and advertising through media, further bolstering its growth strategy.
3. Meta Platforms: Current market cap of US$730.07 billion
Formerly known as Facebook, Meta Platforms Inc (NASDAQ: META) had reached the trillion-dollar market cap milestone in 2021, only to experience a significant decline by the end of 2022, losing nearly 75% of its peak value.
Concerns regarding Meta’s focus on the metaverse and declining profits dampened investor sentiment, leading some to view the company’s trajectory in the tech industry as downward.
However, Meta still retains ownership of leading social media platforms with an enormous user base of approximately three billion people worldwide.
The company’s recent Q1 FY2023 earnings report exceeded expectations, breathing new life into the struggling stock.
Furthermore, the buzz surrounding OpenAI’s ChatGPT has also contributed to Meta’s resurgence.
Meta’s long-term growth strategies, including the integration of generative AI chat into Messenger and WhatsApp, as well as AI tools for video creation in ads and posts on Facebook and Instagram, have generated excitement and optimism.
The allure of the trillion-dollar club
As the trillion-dollar club continues to expand, Berkshire Hathaway, Tesla, and Meta Platforms emerge as top candidates to join this exclusive league.
These companies exhibit the potential for immense growth, driven by their strategic positioning, visionary leadership, and adaptation to evolving market dynamics.
While no guarantees exist in the unpredictable world of investing, the future success of these stocks may propel them into the elite ranks of the trillion-dollar club, redefining the landscape of global business and solidifying their status as market giants.
However, investors should carefully evaluate these downside risks alongside the growth potential of these stocks.
Prudent diversification and diligent monitoring of market dynamics are crucial to mitigate potential losses and optimize investment strategies.
While the allure of the trillion-dollar club is enticing, investors must exercise caution and conduct thorough analysis before considering these stocks as long-term investments.
The path to trillion-dollar valuation is challenging, and the dynamic nature of the market demands a vigilant approach.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
