These 5 artificial intelligence (AI) stocks will be worth a combined $25 trillion by 2030

Is the hype justified? This is the question investors should always ask about anything that receives a lot of attention.

In some cases, the hype fades away — 3D printing comes to mind — but in other cases, the initial hype turns out to be fully justified — the enormous marketplace that has built around the Internet, for example, shows that many of the early proponents were right.

I believe artificial intelligence (AI) falls into the latter category. In my view, the huge success of several AI leaders is just the beginning. We don't know what the future holds, but I predict that by 2030, the five AI stocks will be worth a combined $25 trillion or more.

5 Amazing Things About AI

The world's five largest companies by market cap have one thing in common: they're all investing heavily in AI. Not only that, but their AI strategies have played a key role in driving big gains over the past few years. Here are the “Great Five” in AI.

Data source: Google Finance. *Market cap as of 30/05/2024.

Microsoft overtook Apple to take the number one spot in terms of market capitalization earlier this year. The company's partnership with ChatGPT developer OpenAI is arguably a key factor in Microsoft's impressive growth. The tech giant has integrated GPT-4 across its product lineup. Microsoft has especially benefited from the partnership with OpenAI in its cloud business.

Apple performed well in the first half of 2023. However, since then, it has lagged far behind other major AI stocks. Some investors are concerned that Apple is being left behind in the race to generate AI. The company's growth has also slowed significantly due to saturation in the smartphone market. Nevertheless, Apple is still in a fierce battle with Microsoft for the largest market capitalization.

Nvidia is, without a doubt, the brightest star in the AI ​​world right now. Demand for the company's Graphics Processing Units (GPUs) continues to skyrocket. All the rest of the top five companies (and many more) are Nvidia customers. Most of them want to buy as many GPUs as they can get. Thanks to this massive demand, Nvidia's stock price has skyrocketed.

Alphabet was apparently surprised by the success of OpenAI's ChatGPT, but it didn't take long for the company to roll out its own generative AI products. Despite the PR mishap, Alphabet is now in the thick of the AI ​​race with its Gemini AI model and Google Cloud AI products.

The story continues

Like Alphabet, Amazon also quickly introduced multiple generative AI products after ChatGPT took the world by storm. Amazon's AI initiatives helped drive the company's stock price up significantly. The company's focus on profitability was also a key factor, with Q1 2024 revenue growing more than threefold year-over-year.

The Path to $25 Trillion

The combined market cap of these five AI stocks is currently just over $12.7 trillion. How can these five stocks, combined, nearly double that amount to $25 trillion by the end of 2030? I think there are three big prerequisites:

1. Organizations are rapidly moving to the cloud to reap the enormous return on investment of AI

The bottom line is that AI needs to deliver a significant return on investment (ROI) to businesses, and I expect it will, which will almost certainly mean that organizations around the world will rapidly move their apps and data to the cloud to harness the power of AI.

Amazon CEO Andy Jassy estimates that at least 85% of global IT spending remains on-premise, with the rest in the cloud, and AI could significantly reverse those numbers in a decade.

The shift will directly benefit the largest cloud service providers — Amazon, Microsoft and Alphabet's Google Cloud — and should also help Nvidia, the main supplier of chips for AI servers.

2. AI computing technology continues to advance at a breakneck pace

It's crucial for Nvidia that AI computing technology, especially chips, continue to advance at a breakneck pace, and that the company stays at the forefront. Nvidia's new Blackwell GPU platform, launching later this year, should help make that happen. “There's more Blackwell coming,” CEO Jensen Huang said during the company's first-quarter conference call.

3. Edge AI will become a huge new market

The first two prerequisites should ensure the continued success of Microsoft, Alphabet, Nvidia, and Amazon. But what about Apple? The tech giant needs to make edge AI a huge new market. Edge AI enables AI to run on mobile devices. With over 2 billion active devices worldwide, Apple should be in a position to lead the edge AI market.

Potential problems and pleasant surprises

What could stop these five AI stocks from reaching a combined market capitalization of $25 trillion by 2030? There are many. On the one hand, an economic downturn could cause tech spending to plummet. AI may not deliver the ROI that companies expect. Generative AI “hallucinations” and other issues could still be problematic.

On the other hand, there may be some pleasant surprises in the coming years. One possibility is a major breakthrough in artificial general intelligence (AI), perhaps with AI's computing power improving at an even faster pace than anyone expects.

Whatever happens, I think the hype about AI is justified, and I wouldn't be surprised if my predictions turn out to be too pessimistic.

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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool's board of directors. Keith Speights has invested in Alphabet, Amazon, Apple, and Microsoft. The Motley Fool has invested in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Prediction: These 5 artificial intelligence (AI) stocks will be worth a combined $25 trillion by 2030. This was originally published by The Motley Fool.