The stock market has fluctuated and reshuffled a lot since the start of last year. A surge in artificial intelligence (AI) has shed light on the vast potential of tech stocks, rallying investors and boosting the Nasdaq Composite by more than 60% since Jan. 1, 2023.
Apple (AAPL 0.59%) secured its position as the world's most valuable company by market cap in 2011 and held that spot consistently until this year. The tech giant temporarily lost the top position between January and June of 2024 when Microsoft (MSFT -0.61%) surpassed Apple, and Nvidia (NVDA 1.40%) briefly achieved a market cap above $3 trillion.
However, Apple's market cap of $3.3 trillion has seen it once again become the world's most valuable company. Yet, Microsoft and Nvidia continue to nip at its heels and could overtake the company for good in the coming years.
Microsoft's diversified business model and increasingly established position in AI indicate it could have a more reliable position in tech. Meanwhile, Nvidia's nearly unrivaled dominance in the chip market appears to be the gift that keeps on giving as demand for graphics processing units (GPUs) continues to soar.
So, here are two stocks that I predict will be worth more than Apple five years from now.
1. Nvidia
Nvidia's market cap was $360 billion at the start of 2023 and is now $2.6 trillion, delivering an impressive growth spurt.
The company has consistently outperformed Apple in stock growth over the last five years, with its share price up 2,600% compared to the iPhone maker's 330% rise. And that trend is unlikely to slow anytime soon.
Data by YCharts
This chart shows the massive difference in financial growth Nvidia and Apple have experienced over just the last year. While these companies are both leaders in tech, their businesses differ significantly.
Nvidia is profiting from soaring demand for chips, specifically its GPUs. These chips power many products, from cloud platforms to AI models, personal computers, game development engines, and more. Meanwhile, Nvidia has achieved an estimated 70% to 95% market share in GPUs.
Technological advances are only likely to continue increasing the demand for powerful chips as companies work to improve their hardware and software offerings. Conversely, Apple has struggled to attract new customers to its products over the last year, with its iPhone and Mac revenue down 10% and 8%, respectively.
Apple is working to expand in AI and will launch a major software update this fall called Apple Intelligence. The update will overhaul its operating systems, introducing various generative features. The company hopes Apple Intelligence will convince millions of consumers to upgrade their devices, as the features will only be accessible with newer products. While the software could boost earnings for the current fiscal year, how Apple will profit from AI over the long term remains to be seen.
Meanwhile, Nvidia maintains a crucial role in the industry as a leading chipmaker, a position that will likely see it surpass Apple by market cap over the next five years.
2. Microsoft
For years, Microsoft has played second fiddle to Apple on the list of most valuable companies. Apple has consistently outperformed the Windows company in stock growth, rising 330% since 2019 compared to Microsoft's 195%.
However, that trend has shifted in 2024. Microsoft's share price is up 12% year to date, with Apple's up 8%. It's not a huge difference, but Microsoft's head start in AI and potent position in software will likely see it continue to outperform its rival.
The AI market is projected to expand at a compound annual growth rate of 37% through 2030, which would see it hit nearly $2 trillion in spending. Meanwhile, Microsoft's diverse business model grants it multiple ways to monetize its AI products, thanks to homegrown brands like Windows, Office, Azure, Bing, Xbox, and LinkedIn.
Since the start of 2023, the company has introduced generative features across its product lineup. This includes new productivity tools on Windows and its Office productivity suite, a revamp of Bing, and multiple AI solutions on its cloud platform Azure. Microsoft has also begun recouping some of its hefty investment in AI, attracting new members to Azure and Microsoft 365. Their respective segments have enjoyed year-over-year sales rises of 12% and 20% in 2024.
Data by YCharts
Like Nvidia, Microsoft is outperforming Apple in earnings growth. Over the last three years, Microsoft's quarterly revenue and operating income have risen far higher than Apple's.
Microsoft became a behemoth in tech thanks to its success in software. The emergence of AI has given it the opportunity for its unique skill set and product range to shine. The company arguably has more growth potential in AI, which could allow it to overtake Apple in market value before the end of the decade.
Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 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.
