Apple stock has been a consistent wealth compounder for investors and it's the first U.S. company to command a market cap of $1 trillion, $2 trillion, and $3 trillion. Apple was the best performing FAANG stock in 2019 and 2020 and the second best in 2021. In 2022, it reclaimed the top spot from Alphabet. Which company could be the next Apple stock and will it be a U.S. company or an international company?
First, we should understand that Apple isn't only about its market cap, which is currently at $2.55 trillion and would make the company the world’s eighth-largest economy if it were a country. It's also about innovation, the brand, and the ability to please both consumers and investors. There have been instances when Apple lost the top market cap slot, to Saudi Aramco for instance in 2022. However, when we talk about the next Apple stock we don’t exactly think of Aramco.
Dethroning Apple won't be easy.
Most tech companies of the 1990s have gone bust even though we have success stories like Microsoft and Amazon. Microsoft is the only company that was among the top 10 publicly traded companies in 1999 and continues to do so even in 2022. All of the other companies have gone into literal oblivion.
However, when it comes to Apple, it wouldn't be easy to dethrone the company. Unlike companies like Nokia, which failed to react to the tech changes, Apple has been adopting new technologies and has been gradually growing its target market.
The next Apple stock could be from the tech or green energy industry.
Looking forward, tech and green energy look like the two most promising industries for the next two decades. In green energy, we have EV (electric vehicle) companies as well as renewable energy companies.
The tech ecosystem is even more diverse and autonomous driving, AI, digital advertising, blockchain, cloud, and cybersecurity look like themes worth betting on. Metaverse is another emerging industry but it's still in the nascent stages.
These three companies that could be the next Apple stock.
The next Apple stock could come from green energy or the tech sector. Incidentally, many believe that the world’s first trillionaire could also be from the clean energy sector as countries pour billions of dollars to hasten the green energy transition. The following three stocks have the potential to become the next Apple.
- Tesla (NYSE: TSLA)
- Alphabet (NYSE: GOOG)
- Nvidia (NYSE: NVDA)
Tesla has the best chance of becoming the next Apple stock.
Tesla is a play on both green energy and tech, given its software capabilities. Given its exposure to high-growth industries like EVs, solar energy, energy storage, and autonomous driving, Tesla is possibly the best placed to become the next Apple stock.
The company, like Apple, has a strong product proposition. Just like new Apple products, new Tesla cars also attract a lot of interest from buyers. Both Apple and Tesla offer premium products, a strong brand, and attractive value proposition, which helps them command higher margins than their peers.
Buyers of both Apple and Tesla products swear by their quality while they remain an aspirational product for many buyers. Competitors have also been trying to mimic their products but haven't been very successful.
With Elon Musk at the helm of affairs, Tesla could be a worthy competitor to snatch the top slot from Apple. Musk expects the solar energy business to become as large as the automotive business and has forecast a 50 percent delivery growth CAGR of electric cars for the next few years. Its Autopilot prices are also expected to rise gradually, which would increase the margins and earnings and help the company become the next Apple stock.
Alphabet could also become the next Apple stock.
Alphabet has almost a monopoly in the search business. While companies like Meta Platforms, Twitter, and Snap disappointed markets with ad revenues, Google search posted better-than-expected results in the second quarter. Along with the search business, the company is a play on AI and the cloud.
Alphabet also has exposure to autonomous driving with its Waymo subsidiary. As the global economy continues to digitize, Alphabet is one stock that would stand to benefit. The company has a reasonable chance of challenging Apple’s dominance at the top and could become the next Apple stock if things go well.
Nvidia is another stock that could become the next Apple.
Nvidia is another stock that has the potential to become the next Apple. While Nvidia stock has come off its 52-week highs and lost the title of the world’s most valuable semiconductor company, one can never write it off. The stock has delivered CAGR returns of 47 percent over the last 10 years, which looks astonishing.
Nvidia has exposure to high-growth themes like autonomous vehicles, gaming, metaverse, and blockchain. It has been growing much faster than its peers and markets rewarded it with premium valuations. Nvidia is also an innovation leader, which makes it a worthy contender to become the next Apple stock.
Could a non-U.S. company be the next Apple?
Several Chinese companies could become the next Apple stock. However, after China’s tech crackdown, investors have been wary of Chinese companies. Also, countries around the world have been concerned about the massive data that Chinese companies have about their citizens.
If the global backlash against Chinese companies wasn’t enough, the country is also battling structurally low economic growth. Overall, it looks unlikely that a Chinese company will become the next Apple, at least over the next few years.