We could have a new member of the $2 trillion market cap club this week

Published Tue, Jan 30 20241:59 PM ESTUpdated Tue, Jan 30 20242:40 PM EST

Microsoft made waves earlier this month when it topped a $3 trillion market capitalization and unseated Apple as the most valuable company in the U.S. But while Alphabet is more than $1 trillion off that pace, investors view the Google search engine parent as the next likely candidate to top $2 trillion in market value. Tuesday's earnings after the market close could provide that final boost. On Monday, Alphabet closed at a market capitalization of $1.91 trillion, less than $100 billion away from a $2 trillion market cap and trailing Microsoft and Apple with market capitalizations last at $3.03 trillion and $2.91 trillion, respectively. Apple became the first U.S. company to top a $3 trillion value in January 2022. Alphabet's proximity to $2 trillion pegs it as the most likely contender to reach that milestone, and good earnings coupled with positive commentary on artificial intelligence may prove near-term catalysts, said tech investor Paul Meeks. GOOGL 1Y mountain Alphabet's stock performance over the last year "As long as we don't have a recession, they should do well with digital advertising," said Meeks, who earlier in his career, ran tech funds with $8 billion under management for Merrill Lynch Investment Managers. Alphabet is preparing as aggressively "for the AI world as anybody else, so I expect that that will be a nice driver for the company," added Meeks. Alphabet has been at the forefront of the AI push, using its Bard service to battle it out with Microsoft and its ChatGPT offering. Most recently, Alphabet rolled out its Gemini large language model in December, which it called its largest and most capable model yet. Commentary on the fourth-quarter earnings conference call as to how the YouTube parent plans to monetize Gemini could bode well for shares, said Gene Munster of Deepwater Asset Management. As Alphabet makes further progress bringing AI to market for both enterprise clients and consumers and making money from it — what Wall Street calls "monetization" — Wedbush analyst Dan Ives figures AI is worth another $30 to $40 per share to the company. Beyond Alphabet Alphabet is close to entering the $2 trillion club, but other prominent mega-cap tech companies are making progress, too. Amazon is a candidate partly due to the monetization of its cloud computing business as well as AI capabilities that many investors have yet to factor into its valuation, according to Ives. Amazon's market cap finished Monday at $1.64 trillion. AMZN YTD mountain Amazon's stock performance year to date "AI gets them over the goalposts, but they're just starting the next phase of their growth on enterprise cloud," he said, projecting that AI could add another 25% to 30% in incremental value to Amazon. Continued growth in the Amazon Web Services division could also boost the leading e-commerce platform above the $2 trillion threshold, said Deepwater's Munster. The managing partner also sees Meta Platforms as a future $2 trillion market cap candidate. The Instagram and Facebook parent almost tripled in value in 2023 and is already up 13% since the start of 2024, surpassing the $1 trillion level earlier this month. In the coming year, Munster expects Meta to harness new AI capabilities to improve user engagement and offer new forms of content. META YTD mountain Meta Platforms shares in 2024 Investors will also watch AI chip darling Nvidia . The maker of sophisticated graphics processing units reached a $1 trillion market cap for the first time only in 2023, when it climbed almost 240%. By the Monday close, Nvidia was already worth $1.51 trillion, having soared another 26% this month alone. The potential of AI to add to its profits will continue pushing Nvidia higher, said Wedbush's Ives. "Despite many fretting about valuation, [profit] numbers continue to go much higher, and we don't see any real competition until 2025, 2026," Ives said, adding it's within the realm of possibility that CEO Jensen Huang's Nvidia gets to a $3 trillion market value in the next few years.