Apple (AAPL 1.30%) lately turned the world’s most beneficial firm once more with a market cap of $3.57 billion. Its inventory rallied greater than 60% over the previous three years, whilst iPhone gross sales cooled off amid harder macro and aggressive headwinds.
From fiscal 2023 (ended final September) to fiscal 2026, analysts count on Apple’s income to develop at a compound annual development charge (CAGR) of 5% as its earnings per share (EPS) rises at a CAGR of 10%. That development will seemingly be pushed by a cyclical restoration in iPhone gross sales, an enlargement into higher-growth markets like India, and the evolution of Apple’s subscription ecosystem that hosts over a billion subscribers. Apple may even seemingly repurchase tens of billions of {dollars} in shares yearly to spice up its EPS.
Picture supply: Apple.
These development charges make Apple a steady long-term funding, however they seem to be a bit weak for a inventory that trades at 35 instances ahead earnings and 9 instances this yr’s gross sales. Due to this fact, Apple’s valuations may need been inflated by the current hype relating to its generative AI plans for its first-party apps. Assuming Apple meets Wall Road’s estimates and nonetheless trades on the identical price-to-sales ratio by fiscal 2026, its market cap might develop about 12% to $4.01 billion by the ultimate yr.
That market cap would nonetheless make Apple one of many world’s most beneficial firms, however I consider three of its trillion-dollar friends — Nvidia (NVDA 1.44%), Microsoft (MSFT -0.25%), and Alphabet (GOOG -0.28%) (GOOGL -0.27%) — might eclipse its valuation over the following three years.
The important thing variations between these tech titans
Apple, Nvidia, Microsoft, and Alphabet function totally different enterprise fashions. Apple generates greater than half of its income from the iPhone, however it depends on its providers enterprise to drive most of its development. Nvidia generates most of its income by promoting high-end information facilities for processing AI duties.
Microsoft generates over half of its income from its cloud companies, which embrace its Azure cloud infrastructure platform, Workplace 365 productiveness providers, and Dynamics buyer relationship administration (CRM) providers. Alphabet generates most of its income from Google’s promoting enterprise, which incorporates its search and show adverts, its promoting community, and YouTube. Nevertheless, its smaller Google Cloud enterprise is rising at a a lot quicker clip than its core promoting enterprise.
All 4 firms have been increasing their generative AI ecosystems. Apple lately built-in OpenAI’s ChatGPT into its personal apps and introduced new generative AI options for creating photos and writing textual content. Microsoft, which is OpenAI’s high investor, integrates the start-up’s generative AI instruments into its personal cloud-based providers.
Alphabet has been upgrading its Gemini generative AI platform to maintain up with OpenAI, and it has been rolling out these instruments throughout its total ecosystem. Nvidia earnings from that secular development by promoting the most effective “picks and shovels” for the AI gold rush.
All three tech giants are rising quicker than Apple
However out of those 4 firms, solely Apple generates most of its gross sales from a slower-growth and cyclical client electronics enterprise. Nvidia is a high-growth chipmaker, Microsoft is a cloud and AI play, and Alphabet is a digital promoting firm. That is why analysts count on all three firms to develop quicker than Apple over the following three years.
|
Firm |
Estimated Income CAGR (Subsequent 3 Fiscal Years) |
Estimated EPS CAGR (Subsequent 3 Fiscal Years) |
Present Market Capitalization |
Worth-to-Gross sales Ratio (Ahead) |
|---|---|---|---|---|
|
Apple |
5% |
10% |
$3.57 billion |
9 |
|
Nvidia |
46% |
53% |
$3.26 billion |
28 |
|
Microsoft |
15% |
17% |
$3.47 billion |
14 |
|
Alphabet |
11% |
20% |
$2.37 billion |
7 |
Information supply: MarketScreener.
Assuming they match these estimates and their price-to-sales ratios maintain regular, Nvidia could possibly be price $5.3 trillion by fiscal 2027 (which ends in January 2027), Microsoft could be price $4.5 trillion by fiscal 2026 (which ends in June 2026), and Alphabet’s market cap might attain $3 trillion. However with the identical price-to-sales ratio as Microsoft, Alphabet’s market cap might almost attain $6 trillion. Due to this fact, all three tech giants have a shot at eclipsing Apple’s market cap over the following three years.
However look past the market caps
It is attention-grabbing to trace the market caps of the world’s largest firms, however it’s a superficial method that glosses over their core strengths and weaknesses.
All 4 of those “Magnificent Seven” shares will seemingly continue to grow. Apple is a rock-solid funding within the cell computing market, Microsoft and Google are evolving into cloud and AI firms, and Nvidia remains to be arguably the most effective pure play on the AI accelerator chip market. So as an alternative of questioning which tech big would be the most beneficial in three years, traders ought to merely give attention to their capability to develop their ecosystems, widen their moats, and generate constant development.
Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Leo Solar has positions in Apple. The Motley Idiot has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
