Only seven years ago, AT&T and General Electric were the eighth- and ninth-largest American companies by market cap, respectively. Today, AT&T has fallen to 81st, while General Electric is 65th. A lot can happen in only seven years.
So, which American companies will hold the top five spots in 2030? Here's how I see it.
Image source: Getty Images.
1. Microsoft
By 2030, I predict Microsoft (MSFT 0.11%) will sit atop the list as the largest American company by market cap, for two reasons.
First, Microsoft is already a giant. The company's current market cap of $2.4 trillion is second only to Apple (AAPL 0.50%). As recently as 2021, Microsoft surpassed Apple in market cap, albeit very briefly.
Second, Microsoft's core business is software, which I think will give it a leg up over the next seven years. Rapid advancements in artificial intelligence (AI) should drive massive productivity gains. And the companies that stand to benefit the most are those with ties to the cutting-edge firms behind those AI innovations.
Microsoft's long-standing partnership with ChatGPT maker OpenAI will give it a leg up in developing and integrating the best new innovations in AI. And that could propel the company right into the top spot.
2. Amazon
In a bit of an upset, I have Amazon (AMZN -1.61%) jumping into the No. 2 spot by 2030. Granted, Amazon has some ground to make up over the next seven years -- its market cap of $1.4 trillion is presently half that of Apple's $2.9 trillion.
Yet, Amazon has more than a few cards up its sleeve. Similar to Microsoft, Amazon should greatly benefit from the rise of AI. Every area of Amazon's business could utilize AI to run better, cheaper, and more efficiently.
What's more, Amazon's vast quantities of personalized data should help the company to develop better AI that can better predict consumer behavior -- leading to more effective search results, more convincing ads, and increased sales.
Finally, I expect Amazon Web Services (AWS) to hold on to its top spot in the lucrative cloud services market. With some forecasters predicting the overall cloud services market to exceed $2 trillion by 2030, Amazon should enjoy a hefty revenue stream from its cloud services segment.
3. Apple
Next, we come to Apple, which I predict will fall to No. 3 by 2030. In short, Apple's hardware sales have long been the company's bread and butter. Recently, however, there are some concerns brewing. Three of Apple's four hardware segments (iPhone, Mac, and iPad) showed year-over-year declines in revenue (-2%, -7%, and -20%, respectively). Even with Apple services revenue jumping 8%, total company revenue fell more than 1% year over year.
Image source: The Motley Fool
In the long run, that's bad news. Apple must either reinvigorate its hardware business or rapidly grow its services business if it's going to keep up with the likes of Microsoft and Amazon, which are both growing revenue at close to 10% year over year.
Nevertheless, Apple boasts strong brand loyalty, with its products straddling the line between luxury and everyday appeal. Don't expect Apple to fade immediately. However, given enough time, Apple's stock -- like its namesake fruit -- could be destined to fall back to earth.
4. Tesla
Let me be clear: Tesla (TSLA -0.40%) could be America's largest company by 2030. That might seem absurd, but the king of electric vehicles (EVs) is already the country's sixth-largest company with a market cap of $800 billion.
For Tesla to climb up the list, the company must clear several key hurdles.
First, production growth must continue. Tesla should produce roughly 1.8 million vehicles this year, which keeps the company on track to hit its 2030 goal of 20 million vehicles annually.
Second, Tesla must begin realizing economies of scale at its new production facilities. That will help the company halt -- and hopefully, reverse -- recent losses in gross margin, even if prices fall further.
Third, full self driving (FSD) must become a reality. While this third point is the most difficult to achieve, it offers the highest upside. FSD technology would catapult Tesla from simply an EV company to a transportation disrupter of massive scale.
If CEO Elon Musk and Tesla can pull it off, the sky is the limit for the company -- putting even the top spot within reach.
5. Nvidia
Finally, Nvidia (NVDA -0.79%) rounds out my top five, holding on to its position as the fifth-largest American company by market cap.
Nvidia is the world's leading maker of graphics processing units (GPUs). These powerful devices are the brains behind the world's supercomputers and, in turn, many of the awe-inspiring AI applications that have captivated the world this year.
And while competition in the field is growing -- notably from Advanced Micro Devices and Intel -- Nvidia maintains a solid lead. In the next two years alone, analysts expect Nvidia's revenue to more than double -- from $27 billion in fiscal year 2023 to $59 billion in fiscal year 2025.
With that sort of jaw-dropping growth, I think Nvidia can easily maintain a spot within the top five by 2030.
