As of the close of trading on Dec. 13, nine companies boasted market capitalizations of more than $1 trillion. In order of largest to smallest, those companies are:
- Apple: $3.7 trillion
- Nvidia: $3.3 trillion
- Microsoft: $3.3 trillion
- Amazon: $2.4 trillion
- Alphabet: $2.4 trillion
- Meta Platforms: $1.6 trillion
- Tesla: $1.4 trillion
- Broadcom: $1.1 trillion
- Taiwan Semiconductor Manufacturing: $1 trillion
The common thread stitching each of these companies together is artificial intelligence (AI). In areas including software, hardware, cloud computing, social media, e-commerce and more, all of these companies are playing major roles in the AI revolution.
Dan Ives, a managing director and senior analyst at Wedbush Securities, recently published his top 10 predictions for the tech sector in 2025. While it's clear that Ives is bullish on the industry as a whole, he foresees AI tailwinds propelling Apple (AAPL -1.32%), Microsoft (MSFT -1.73%), and Nvidia (NVDA -2.09%) into the $4 trillion club next year. Let's break down the AI catalysts that could help these tech giants continue to climb higher next year.
1. Apple
If you're surprised to see Apple on this list, I wouldn't blame you. For much of the past two years, the company has been suspiciously quiet about its AI ambitions. Meanwhile, its "Magnificent Seven" counterparts couldn't have been any more vocal about their respective AI roadmaps.
Apple's first big foray into AI is its new Apple Intelligence software, which leverages ChatGPT across Apple's ecosystem of hardware devices and services such as its voice assistant, Siri.
During Apple's most recent earnings call, Chief Executive Officer Tim Cook shared the following with investors: "With the introduction of Apple Intelligence, we're beginning a new era for iPhone."
To me, it's pretty clear that Apple's next growth phase will rely heavily on a successful launch of the iPhone 16. During the company's fiscal 2024 fourth-quarter earnings call, Cook also shared that during the period (which ended Sept.28), iPhone sales set a new record for the company as they increased in every geographic segment.
While this is encouraging, I would say Apple will need a few more quarters of AI adoption before I think it's appropriate for the stock to rise significantly. Ives is anticipating a huge upgrade cycle among iPhone users (known as a supercycle) as consumer purchasing power gradually strengthens amid an improving macroeconomic picture.
Image Source: Getty Images.
2. Microsoft
Since making a $10 billion investment in ChatGPT developer OpenAI a couple of years ago, Microsoft has swiftly integrated AI enhancements across its ecosystem. In my view, the most important catalyst fueling Microsoft's growth now resides in cloud computing infrastructure. While it faces intense competition from Amazon, Alphabet, and Oracle, Microsoft has demonstrated how AI is fueling new opportunities and helping it navigate the competitive landscape.
For its fiscal 2025 first quarter, which ended Sept. 30, Microsoft generated $24.1 billion in sales from its intelligent cloud segment. Within this division, revenue from the Azure Cloud platform grew by 33%. But more importantly, Chief Financial Officer Amy Hood pointed out that "Azure growth included roughly 12 points from AI services."
The commanding growth of Azure is only one part of the story. Microsoft's ability to attribute growth to its AI services will be increasingly important as competition rises. But as Hood pointed out when speaking about Azure, "demand continues to be higher than our available capacity." This is a good problem to have.
I think the unmet demand for cloud capacity will continue to drive Azure's growth next year, largely thanks to Microsoft's focus on AI integration for its clients.
3. Nvidia
It shouldn't come as a surprise that Nvidia rounds out the list of companies that Ives predicts will hit a $4 trillion valuation in 2025.
During the past two years, Nvidia has become a household name thanks to its influence in the AI movement. Its graphics processing units (GPU), data center services, and CUDA software combine to offer clients an unparalleled end-to-end AI technology stack. High demand for its wares has turned Nvidia into the second most valuable company in the world (and tied with Microsoft as of this writing).
While you might think that Nvidia's momentum has to slow at some point, Ives doesn't foresee that happening in 2025. Nvidia recently launched the first GPUs made with its next-generation Blackwell architecture. To give you an idea of how much demand there is for this new hardware, Blackwell chips are reportedly sold out for the next year.
On top of this, Ives is also calling for more than $1 trillion in AI infrastructure spending in the near term. Considering that Nvidia customers including Microsoft, Alphabet, Meta Platforms, and Amazon have all explicitly stated that their AI-related capital expenditures (capex) are going to rise next year, Nvidia is extremely well positioned to gain incremental market share and become even more dominant.
The bottom line
If I had to pick three companies I think are most likely to reach a $4 trillion valuation, I'd choose the same ones as Ives. The only detail about which I disagree with Ives is that I predict Nvidia will be the first to reach this milestone, with Apple and Microsoft following shortly thereafter.
The bigger idea here, however, is that each of these megacap tech companies is benefiting from several tailwinds that could lead to significant upside for patient investors.
