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Amazon's earnings growth has been outstanding in recent quarters.
Alphabet's stock is undervalued compared to Apple's.
Strong AI investment will propel Meta's growth over the next few years.
Apple (NASDAQ: AAPL) held the title of world's largest company for several years, but it has since relinquished that title to Nvidia (NASDAQ: NVDA) and Microsoft (NASDAQ: MSFT), likely for good. However, I don't think that's the last stop for Apple. Judging by the company's lack of new innovative products, coupled with a practically non-existent AI strategy, I wouldn't be surprised if other companies pass Apple in terms of market cap over the next few years.
Three companies that I think can surpass Apple by 2030 are Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META). The paths that each stock needs to take to get there are different, but I think that it's doable within the next five years.
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Image source: Getty Images.
First, let's tackle why Apple is struggling. After the COVID sales boom subsided for Apple, it failed to grow its revenue meaningfully.
AAPL Operating Revenue (Quarterly YoY Growth) data by YCharts. YoY = year-over-year.
While Apple can improve margins and repurchase shares, there is only so much effect those activities can have without increasing sales at a meaningful pace.
There also don't appear to be any innovative technologies in the pipeline that can drive Apple's stock higher. Its AI launch flopped, and new iPhones haven't seen a game-changing feature in years. Unless something drastic changes, the mid-single-digit revenue growth for Apple is what's to be expected. That's far different from the trio it's being compared against.
All three of these companies have produced far greater revenue growth than Apple recently.
AAPL Operating Revenue (Quarterly YoY Growth) data by YCharts.
Meta Platforms and Alphabet are growing two to three times faster than Apple, which will allow them to catch up to Apple if they can maintain their pace. With each company investing in AI and seeing success, I wouldn't be surprised if both these companies can keep up their growth rates for the foreseeable future.
Amazon isn't growing significantly faster than Apple in terms of revenue. Still, due to the rise of high-margin businesses like Amazon Web Services (AWS) and advertising, its profits are increasing at a rapid pace.
AAPL EPS Basic (Quarterly YoY Growth) data by YCharts. EPS = earnings per share.
All three of these companies are growing earnings at a much faster pace than Apple, which is what the market cares about for mature businesses. This will allow all three to surpass Apple by 2030, but just how easily will each company achieve this goal?
Despite Apple's slower-than-market growth rate, it trades at a massive premium to the S&P 500 (SNPINDEX: ^GSPC), which trades for 23.2 times forward earnings.
AAPL PE Ratio (Forward) data by YCharts. PE = price-to-earnings.
Furthermore, it has a massive premium over Alphabet, which has posted substantially better results than Apple recently. If Apple and Alphabet were to trade at the same valuation, Alphabet would be worth more than Apple is today. So, the path for Alphabet to be worth more than Apple is fairly clear.
Meta Platforms is valued at approximately the same level, so its growth needs to come from earnings. Even though Meta grew earnings per share at a 36% pace during the last quarter, let's say that slows to 20% growth while Apple accelerates to a 10% EPS growth rate. If that occurs, five years from now, Apple will have $157 billion in net income, while Meta will have $166 billion. If these two are valued at the same price, then Meta would be the larger company.
Amazon trades at a much higher premium than Apple. It has earned this due to its rapid earnings growth, but it's unlikely to last forever. Amazon and Meta have similar net incomes, and even if Amazon's earnings growth decelerates to a 20% pace and its valuation drops, it would still be valued at a comparable level to Meta Platforms, allowing it to surpass Apple.
All three of these companies have excellent growth prospects and appear to be great investments to consider purchasing now. Apple is a slow-growing and expensive stock, and I'd sell my shares if I owned any and invest in these three.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, 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.
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