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To paraphrase the late Senator Everett Dirksen, a trillion here, a trillion there, and pretty soon you're talking real money.
Trillion-dollar stocks was once unheard of. Then it became a rarity. Now it's almost commonplace. Six stocks currently have at least a $1 trillion market capitalization and a handful of others are knocking on the door to be let into the elite club.
While all of the companies are obviously successful and profitable , their trillion-dollar status doesn't automatically confer a buy recommendation. In fact, it may suggest the exact opposite. Having come so far so fast, maybe they've reached their zenith, at least for the time being.
Of the half-dozen trillion-dollar stocks on the market, the following two companies are still a buy despite their sky-high valuations.
Key Points About This Article:
- While not exactly a dime-a-dozen, trillion-dollar stocks are much more common today.
- Being worth $1 trillion doesn't automatically make the stock a buy. However, these two stocks are worth every penny.
- If you want to pick up some of the stocks with the greatest potential no matter what their market valuation is, check out our brand-new “The Next NVIDIA” report that lays out the next megatrends in AI and the companies we’re confident can dominate them.
Apple (AAPL)
Entrance to Apple building with large Apple logo
Apple ( NASDAQ:APPL ) was the first stock ever to cross the $1 trillion valuation threshold back in 2018. Today, it remains the most valuable company on the market worth over $3.4 trillion. There is good reason to believe it will be worth a lot more very soon.
Despite Warren Buffett cutting his ownership stake in Apple in half in the second quarter, the tech star is poised for future growth. The upcoming release of the newest iPhone will cause a new upgrade cycle as users seek to take advantage of Apple's latest generative artificial intelligence features. There will undoubtedly be more features released, but AI capabilities are what most people are interested in.
The iPhone became the top-selling smartphone globally last year, retaking the lead from Samsung . It was the first time since 2010 that Samsung was not the leader, according to the market researchers at IDC. In the U.S., it's not even close. Apple has a 55% share of the market compared to second-place Samsung with 24%.
So what of Buffett's stock dump? It suggests one of two things: he either expects a big market crash and is moving to cash or he is looking to making a big acquisition. Berkshire Hathaway ( NYSE:BRK-A )( NYSE:BRK-B ) now has a $277 billion cash war chest.
Apple wasn't the only stock he sold as he also pared back his holdings in Bank of America ( NYSE:BAC ), his second biggest holding. Whatever his rationale, it's not likely the Oracle of Omaha believes Apple stock isn't a good company as he still owns $84 billion worth of shares.
Although AAPL stock trades at a premium, the loyalty of its customers to remain in the company's ecosystem will drive new sales higher. With new processors and capabilities spread across it entire product line, look for a rising tide of sales to lift the stock higher.
Meta Platforms (META)
Meta logo with Facebook logo on smartphone
Social media leader Meta Platforms ( NASDAQ:META ) is the cheapest of the trillion-dollar stocks on the index with a market valuation of $1.3 trillion. It crossed the threshold in January this year, though it is the second time it has been a member of the club.
Back in 2019, when it was still known as Facebook, Meta became a trillion-dollar stock. Shares are up 51% in 2024 and 82% higher over the past year. They could continue rising further.
One of the primary arguments in favor of buying Meta Platforms is its massive user base. At the end of June, Meta had 3.27 billion users across its family of apps including Facebook, Instagram, Messenger, and WhatsApp.
Having created this critical mass, the platforms are now the go-to spot for advertisers. The rebirth of digital advertising is a boon for Meta, which saw a 22% increase in revenue to $38.3 billion. Year-to-date, advertising revenue is 24% higher . Because it is the leading social media site, Meta Platforms will continue to attract a large share of advertising dollars.
It's also led to growing average revenue per person, which stood at $11.89 at the end of the second quarter, up 14% from last year and 6% sequentially.
Because its spending on the metaverse remains a money pit, Meta's financial performance could be much better. Investors were worried earlier this year when CEO Mark Zuckerberg said they would be spending billions on AI. Too many remembered the large results from the billions spent on the virtual world and only had billions in losses to show for it.
They've since embraced Zuckerberg's plans. Because Meta's AI ambitions are more consumer oriented than commercial, it is essentially evolving into a super app with some of the most powerful large language models available. Meta calls its Llama-based AI agent “the most useful assistant in the world.”
It makes META stock a buy for the long-term growth potential being built into the company.
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