Finding the next trillion-dollar companies isn’t easy, but it doesn’t have to be difficult. While tempting, avoid the urge to pick a handful of small-cap tech stocks or growth stocks that you think may be worth $1 trillion or more in the future. While tempting, and you may generate a substantial gain, finding the most viable next trillion-dollar companies should start with seeing which names are closest.
Companies worth more than a trillion dollars are household names – Apple (NASDAQ:AAPL) at $2.85 trillion, Microsoft (NASDAQ:MSFT) at $3.01 trillion, you get the idea. But the companies further down the list, in the mid-$500 billion range, tend to be just as high-visibility. Unfortunately, though well-known, their potential as one of the next trillion-dollar companies tends to go overlooked.
These companies range between $536 billion and $856 billion – so, if any company can claim it’s on the path to becoming one of the next trillion-dollar companies, it’ll likely be one on this list.
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), valued at $856 billion, is the closest to becoming a trillion-dollar company. Of course, having the trillion-dollar company Apple as a major component of the conglomerate’s stock holdings helps the cause, but Berkshire’s trillion-dollar potential doesn’t stop there. Warren Buffett, the value king and Oracle of Omaha, is well-known for this careful consideration and “fundamentals first” approach to investing alongside his late vice chairman, Charlie Munger.
That approach will likely become more popular as market volatility increases, further adding to Berkshire’s value. Investors nervous about tech concentration within the Magnificent 7 stocks are cycling into value stocks at a rapid rate, and Berkshire is an easy pick within the broader asset class. Investors can (safely) assume that Buffett and his team are executing high-level due diligence for each of the conglomerate’s direct investments and holdings, so owning Berkshire is a way to outsource value stock research effectively.
Buying a piece of Berkshire today is opportune, too – experts expect bombshell news in this week’s earnings report that could bring it closer to trillion-dollar status.
Next Trillion-Dollar Companies: Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) is catching up to Berkshire in the race to be a trillion-dollar company, as the pharma stock is currently worth $705 billion. Recent developments in two key segments accelerated LLY’s journey, though, and there’s little sign the trends will slow.
First, LLY’s weight loss drug Zepbound hit markets in November 2023 and rapidly exploded, generating $175.8 million in sales and on pace to become the best-selling drug ever. National market demand isn’t going anywhere, either, with one in three adults overweight and two in five classified as obese. Priced at $1,000 per month, Zepbound represents a source of recurring revenue with near-unlimited expansion potential to boost LLY’s bottom line.
LLY’s second boom comes from a legacy drug, but one marking record sales of its own. Diabetes drug Mounjaro saw logistical chain shocks cut availability late last year, but increased pricing and steadied supply led to Mounjaro contributing as much as 25% to LLY’s top-line sales.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) is the sole international stock on our list of the next trillion-dollar companies, but that doesn’t make the $661 billion company any less competitive.
Though not necessarily a household name like some of the other future trillion-dollar companies, TSMC is at the top of most analysts’ lists of innovative chipmakers. The company powers many of today’s electronics and remains a top U.S. supplier even as legislators try to push American semiconductor manufacturing forward, albeit slowly.
TSMC also receives massive capital stakes from developed countries, like Japan, which committed a chunk of its $10 billion aid package to TSMC as part of a region-wide semiconductor development initiative. As long as AI trends hold steady, TSMC remains on track to hit a trillion-dollar valuation. The company’s financials, with little-to-no debt and a decent 40% net margin, are untouchable and support its bid to become a trillion-dollar company. TSM’s financial prudence has kept it stable throughout the past years’ turbulence, particularly if balanced against other emerging market stocks.
Next Trillion-Dollar Companies: Tesla (TSLA)
Tesla (NASDAQ:TSLA) is the only Magnificent 7 stock not worth $1 trillion, making it an easy bet to hit that valuation soon. Currently worth “just” $586 billion, most of Tesla’s market cap decline came from recent developments rather than long-term risks.
To be fair, Tesla’s market cap hit $1 trillion in 2021 and again in 2022, so Musk and his team are used to high valuations. The limiting factor preventing Tesla’s rise back to trillion-dollar status will, ultimately, be whether cost-cutting and lower margins hurt less than the new sales that lower prices generate.
Today, Tesla is more than 50% below past highs as 2024 brings new waves of pressure onto its operational standing. Most notable, though, is a look at how analysts’ forward-looking estimates change over time. Specifically, projected earnings fell consistently after Musk bought Twitter and rebranded it to X. While other factors influence forecasts, Musk’s relative lack of attention to Tesla might be preventing the stock from reverting back to trillion-dollar status.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is a direct supplier to the trillion-dollar company Apple, so it’s little surprise that the tech stock is positioned to join the club soon itself. Valued at $585 billion, AVGO stock more than doubled over the past year, and there’s little sign of slowing momentum. After closing a deal with VMware to expand its footprint, Broadcom is also diversifying and less reliant on companies like Apple (which currently contributes to about 20% of AVGO’s top-line sales). Note that, in the short-term, some transaction costs from the VMware merger might hurt – but that’s nothing compared to the long-term upside.
Artificial intelligence is also driving AVGO higher, so as long as AI remains a tech staple, expect it to keep boosting AVGO’s bottom line. Last year, AI and related advances added $350 billion to Broadcom’s value. At the same time, UBS analysts are calling for continued AI enthusiasm regarding AVGO, with one expert raising his price target by more than $400 to $1,475 per share, which is nearly 20% higher than today’s pricing.
Next Trillion-Dollar Companies: Visa (V)
You may not expect a legacy firm like Visa (NYSE:V) to be among the next trillion-dollar companies, but Visa is unique in that it is still innovating in a mature market. Despite a range of startups and upstarts, Visa remains dominant in cashless payment processing, with about 20% of the global market under its control.
But that isn’t stopping Visa, as the future trillion-dollar company continues adapting to digital currencies and online transactions. Today, the company is targeting enterprise-level clients in a bid to make spending simple under corporate accounts. That’s particularly important as corporate credit makes up the largest percentage of overall revolving credit utilization and continues expanding. Consumer-focused payment processing makes our lives easier, but the real money is in B2B spending. That’s a fact Visa happily embraces and one that contributes to its race to trillion-dollar status.
Novo Nordisk (NVO)
The thesis supporting Novo Nordisk (NYSE:NVO) becoming the next trillion-dollar company is similar to Eli Lilly’s, and, worth $536 billion, NVO isn’t too far behind. The world’s largest wealth fund agrees, saying recently that both Novo Nordisk and Eli Lilly are on track to trillion-dollar status. And, like LLY, Novo Nordisk’s path is lined with weight loss drugs that are proving increasingly popular.
Though supply issues put some pressure on NVO’s weight loss drug Wegovy, that doesn’t mean sales will slow financially. Instead, since Wegovy trends toward the discretionary side of therapeutic treatment, expect pricing to increase and meet reduced supply as demand climbs. Like LLY, that’ll boost NVO’s bottom-line numbers and prove profitable once logistics stabilize and prospective customers flood the manufacturer.
With as many as 15 million adults contributing to a $100 billion obesity treatment market by 2030, Novo Nordisk is well on its way to trillion-dollar status.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.