Because the start of 2023, a tech rally has boosted countless tech stocks. Advances in high-growth sectors like artificial intelligence (AI) have highlighted the large potential of corporations lively in related fields like chip design and cloud computing. Nvidia (NASDAQ: NVDA) has been considered one of the most important recipients of the bull run, with its shares up 785% since January 2023.
The corporate profited from increased demand for AI chips and its ability to provide its hardware to many of the market. At the beginning of last 12 months, Nvidia’s market cap was $360 billion. Yet, recent growth has seen it develop into the primary chipmaker valued at greater than $3 trillion, joining the ranks of corporations like Apple and Microsoft.
Nvidia’s meteoric rise raises the query: what company might be next to hit such a milestone?
Because the world’s fourth-most-valuable company, Alphabet‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) market cap of $2 trillion puts it in a main position to be the following company to cross the $3 trillion threshold. The tech giant has built itself right into a money cow with growth catalysts in multiple markets. Meanwhile, the chart below shows its stock is among the best bargains in tech.
Alphabet’s stock is up 19% 12 months thus far, delivering more stock growth than any of those corporations aside from Nvidia. Yet, Alphabet boasts the bottom price-to-earnings (P/E) ratio amongst its peers, indicating its stock offers essentially the most value.
So, here is an undervalued stock that might join Nvidia within the $3 trillion club.
Growth catalysts throughout tech
Alphabet has a potent position in tech, having expanded to multiple sectors of the industry. Hard-hitting brands like Android, YouTube, Chrome, and the various products under Google have made Alphabet the go-to for dozens of crucial services. The recognition of those platforms has seen the corporate amass a major user base, hosting nine platforms which have achieved 1 billion or more users as of 2023.
Alphabet’s dominant role in tech is principally due to consistent reinvestment in its business and willingness to try latest ventures. This strategy has led to an extended list of now-defunct products, with Google Hangouts, Stadia, and Google Glass just a couple of. Nonetheless, Alphabet’s readiness to speculate in promising industries has also allowed it to realize lucrative roles in digital promoting, cloud computing, and AI.
The corporate has used its massive user base to sell ads on its various platforms, a business that now accounts for 78% of its revenue. The digital promoting industry is value about $740 billion and is expanding at a compound annual growth rate (CAGR) of seven%, with Alphabet liable for 26% of all global ad sales.
Nonetheless, Alphabet’s biggest growth driver during the last 12 months has been Google Cloud, with its 11% market share in cloud computing. The platform is expanding quickly, delivering revenue gains of 29% 12 months over 12 months within the second quarter of 2024. Cloud computing has develop into considered one of the fastest-growing areas of AI, an industry developing at a CAGR of 37% through 2030.
Google Cloud outperformed market leaders Microsoft’s Azure and Amazon Web Services in sales growth in Q2 2024 and has shown no signs of slowing. The platform is more likely to boost earnings for years.
Alphabet delivers years of consistent gains
Alphabet has a popularity for consistent growth. In truth, an investment of $10,000 in its stock in 2014 would now be value near $58,000.
The tech giant has proven itself to be a king of reliability, suggesting that it’s more of a matter of when, not if, its market cap will hit $3 trillion.
The last five years have not been easy for a lot of tech corporations, with a worldwide pandemic in 2020 and multiple years of economic uncertainty. Nonetheless, the chart above shows that Alphabet’s earnings and stock price have still delivered triple-digit growth in that timeframe.
The Google parent’s free money flow hit $61 billion this 12 months, proving it has the funds to proceed investing in its business and sustain with its rivals. Its P/E of 24 is shockingly low in comparison with its peers, indicating now’s the time to speculate on this undervalued stock that may likely join Nvidia within the $3 trillion club before it’s too late.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Idiot’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Idiot recommends the next options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
This Undervalued Stock Could Join Nvidia within the $3 Trillion Club was originally published by The Motley Idiot