The U.S. economy has proven exceptionally resilient in 2023, despite being plagued by inflationary and recessionary pressures. The U.S. equity market has also picked up the pace, with the bull rally continuing throughout July and early August. While a better-than-expected mid-year earnings season has definitely helped, the real reason for this current rally may be investors' increasing confidence in the Federal Reserve's ability to tame inflation without causing a deep recession.

In such a bullish environment, it makes sense for retail investors to pick up positions in strong and growing businesses such as Meta Platforms (META -1.16%) and Tesla (TSLA 0.15%). Both companies were part of the $1 trillion market cap club in 2021 but suffered dramatically during 2022's brutal stock sell-off.

Here's why I believe these two stocks can rejoin the $1 trillion club again in the coming years.

Meta Platforms

After a difficult 2022, Meta Platforms' stock has rallied, appreciating over 159% this year. The company now seems to have returned to its growth trajectory.

In the second quarter, Meta posted solid growth in its user base, where the daily active people (DAP) using the Family of Apps -- Facebook, WhatsApp, Messenger, Instagram, and Threads -- grew by 7% year over year to 3.07 billion, while the number of monthly active people (MAP) rose by 6% year over year to 3.88 billion. Meta also saw a 34% year-over-year jump in total ad impressions across services, although the average price per ad declined year over year by 16%. While the growth in ad impressions came mostly from lower monetizing services and regions (thus affecting pricing), this trend may soon turn for the better as the artificial intelligence (AI) discovery engine is gradually driving up engagement on the Facebook platform. AI-recommended content from unrelated accounts in the Facebook Feed has resulted in users spending 7% more time on the Facebook platform in the second quarter.

Reels, a short-form video format, is also helping drive engagement. Notably, the segment, with over 200 billion plays across the platforms, has now reached an annual run rate of $10 billion, significantly higher than $3 billion at the end of the second quarter of the previous year. Finally, Meta is also focusing on monetizing the 200 million users of the WhatsApp Business app to enable them easily advertise on Facebook and Instagram without a Facebook account.

Besides multiple growth initiatives, CEO Mark Zuckerberg has also been cutting costs in 2023 by removing layers of middle management and shelving noncritical or nonperforming projects.

Wall Street analysts expect the company's non-GAAP (adjusted) earnings per share (EPS) to reach $19.23 in fiscal 2025. Multiplying this with the non-GAAP forward P/E multiple of 22.71 suggests a stock price close to $436 -- allowing the company to enter the $1 trillion market capitalization group.

Tesla

Tesla's shares have surged by nearly 91% in 2023, reaching a market cap of $755 billion. While still significantly less than its all-time-high market capitalization of nearly $1.6 trillion, there are a few factors that can justify a $1 trillion market cap for the company in the future.

First, Tesla considers its autonomous driving technology and full self-driving (FSD) platform to be the key to long-term growth and profitability. The company is aiming for a gross margin of 70% or higher, a dramatic improvement from the 18.2% gross margin in the second quarter.

To realize its pursuit of self-driving cars, Tesla has been training its autonomous driving software on huge amounts of real-world driving video data (recorded and transmitted by millions of Tesla cars on the road). To better process this data and develop more robust models, the company is investing over $1 billion in the Dojo Supercomputer system. CEO Elon Musk expects its autonomous driving technology to prove superior to human capabilities by the end of 2023.

Second, Tesla has been highly focused on product innovation and portfolio expansion to further grow its customer base. To that effect, the company has launched cheaper versions of Model S and Model X cars. The company is also gearing up to launch the Cybertruck, which is expected to be a game changer in the electric vehicle industry thanks to its unique design and innovative features. If the Cybertruck lives up to its hype this can push up Tesla's market capitalization over the $1 trillion line in the short run.

However, even if the Cybertruck does not prove to be a big hit, the chances of Tesla reaching the $1 trillion goal remain high. Wall Street analysts are guiding for the company's non-GAAP EPS to reach $4.92 in fiscal 2024. Multiplying this with the company's non-GAAP forward PE multiple of 69.58 suggests a stock price close to $342 -- easily bringing the company into the $1 trillion market capitalization team.

Although both of these stocks have the potential to reach a trillion-dollar valuation, this arbitrary goal should not mean much for long-term investors. Instead, investors should opt for a dollar-cost-averaging strategy and build a modest position in these two fundamentally strong stocks to enjoy strong returns in the coming years.