2 Artificial Intelligence (AI) Stocks That Could Be Worth More Than Apple in Five Years

Apple is currently the most valuable company in the world with a market capitalization of $3.4 trillion, but is closely followed by two other tech giants: Microsoft (NASDAQ: MSFT) And Nvidia (NASDAQ: NVDA). It’s worth noting that both Microsoft and Nvidia took turns becoming the most valuable company in the world this year, but Apple managed to regain the top spot, thanks to a recent surge in its share price.

However, if we compare Apple’s prospects for the next five years with those of Nvidia and Microsoft, it won’t be surprising that they become more valuable than the iPhone maker. Below you will see the reasons why.

1.Microsoft

Microsoft’s market capitalization of $3.3 trillion means it is currently remarkably close to Apple. More importantly, Microsoft is experiencing faster growth than Apple, a trend that is likely to continue over the next five years, thanks to the increasing adoption of artificial intelligence (AI) in multiple markets.

For example, Microsoft’s revenue in the third quarter of fiscal 2024 (which ended March 31) rose 17% year over year to $61.9 billion. Meanwhile, Apple’s revenue in the second quarter of 2024 (for the three months ended March 30) fell 4% year-over-year to $90.8 billion. This stark difference in the two tech giants’ performance is largely due to AI.

While Microsoft is benefiting from multiple AI-driven growth trends such as cloud computing, personal computers (PCs) and workplace collaboration tools, Apple is late to the AI ​​smartphone market. Microsoft’s Intelligent Cloud segment reported a 21% year-over-year revenue increase to $26.7 billion in its third fiscal year, driven by increasing use of its cloud-based AI services.

The company pointed out that its Azure cloud business is a increase of 7 percentage points, thanks to AI. The cloud-based AI services market is expected to generate $647 billion in revenue by 2030, reaching a compound annual growth rate of nearly 40% by the end of the decade, and Microsoft benefits from a potentially large incremental revenue opportunity in this market.

Furthermore, Microsoft Azure’s 25% share of the cloud computing market means the company is well-positioned to tap into this multibillion-dollar AI opportunity. But this isn’t where the AI-driven catalysts for Microsoft end. The company’s generative AI chatbot Copilot, which serves both individual and business users, has seen healthy adoption.

For example, Microsoft’s Copilot for GitHub, a developer platform used by more than 100 million users, had 1.8 million paying subscribers at the end of March. Meanwhile, enterprise adoption of Copilot for workplace productivity remains solid. In the words of CEO Satya Nadella:

The story continues

Microsoft charges business customers $30 per user per month for its Copilot. The individual plan costs $20 per user per month. So the company is already generating revenue from the AI ​​assistant market, which is expected to grow eightfold over the next decade and generate nearly $167 billion in revenue by 2033.

The above AI-related catalysts indicate why Microsoft’s annual revenue is expected to grow 16% per year over the next five years, compared to Apple’s projected growth rate of 10%. This could ultimately make Microsoft’s stock more profitable and more valuable than Apple in the long run.

2. Nvidia

Nvidia is currently the third largest company in the world, with a market capitalization of $3 trillion. The semiconductor specialist’s shares have risen a remarkable 745% since the start of 2023 as companies like Microsoft and other tech giants looked to get their hands on its AI graphics processing units (GPUs) to train and deploy AI models and services.

More importantly, Nvidia has more than 90% of the AI ​​chip market. This stellar market share is the reason behind its excellent growth in recent quarters, resulting in much better financial performance than Apple.

With the global AI chip market expected to grow tenfold over the next decade to become a $300 billion market, Nvidia’s excellent growth is likely to continue. According to some analysts, the company’s data center revenue alone could rise to $280 billion over the next four years, up from $47.5 billion in the previous fiscal year.

Add to that additional catalysts such as the recovery of the PC market thanks to the adoption of AI-enabled PCs (which has boosted Nvidia’s gaming business), and it’s easy to see why analysts estimate that Nvidia’s revenues will increase by 46% per year. for the next five years. That is significantly faster than the growth Apple is expected to achieve in the same period.

Of course, Apple could get a boost thanks to the rise of AI smartphones, but investors should keep in mind that the company operates in a highly competitive market. In the second quarter of 2024, Apple’s smartphone market share was 15.8%, compared to 16.6% in the same quarter in 2023. Shipments grew just 1.5% year over year, compared to overall growth the smartphone market of 6.5%.

It’s easy to see why Nvidia’s growth is expected to be faster as it leads the AI ​​chip market, while Apple operates in a crowded space where rivals have acted with enthusiasm by jumping on the AI ​​train. As such, the possibility of Nvidia overtaking Apple’s market share in the next five years, thanks to faster business results, cannot be ruled out, and AI will play a central role in helping the semiconductor company achieve that.

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Hard Chauhan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Apple, BP, Microsoft, Moody’s and Nvidia. The Motley Fool recommends Amgen, Cognizant Technology Solutions, and Novo Nordisk and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has one disclosure policy.

Prediction: 2 Artificial Intelligence (AI) Stocks That Could Be Worth More Than Apple in Five Years was originally published by The Motley Fool