These two fast-growing tech giants may be able to overtake the world’s second-largest company in the long run thanks to their lucrative end markets.
Microsoft is the second-largest company in the world with a market cap of just under $3 trillion as of this writing. The tech giant has managed to reach this position thanks to its solid presence across multiple applications such as cloud computing, its popular Windows operating system, and workplace collaboration tools.
Lately, artificial intelligence (AI) has turned out to be another solid growth driver for Microsoft, contributing to an acceleration in the company’s growth in recent quarters. However, Microsoft isn’t the only tech giant that is using AI as a springboard to boost its growth. Nvidia (NVDA 4.08%) and Meta Platforms (META -0.35%) are also benefiting from the booming adoption of AI in their respective industries.
Let’s take a closer look at the prospects of Nvidia and Meta Platforms over the next decade to find out why they have the potential to overtake Microsoft’s market cap in the long run.
1. Nvidia
Nvidia is currently the third-largest company in the world behind Microsoft with a market cap of $2.56 trillion. The semiconductor specialist’s value has shot up remarkably since the end of 2022, when it became evident that its data center graphics processing units (GPUs) will play a central role in the proliferation of AI.
Microsoft partner OpenAI used Nvidia’s GPUs to train ChatGPT, the generative AI chatbot that exploded in popularity following its launch in late 2022. Since then, tech giants across the globe have been lining up to buy Nvidia’s AI GPUs to train and deploy AI models. This has allowed the chipmaker to control more than 80% of the AI chip market, leaving very little for rivals such as AMD.
KeyBanc Capital Markets analyst John Vinh estimates that Nvidia could generate a whopping $200 billion in data center revenue next year with demand for its next-generation Blackwell AI chips reportedly stronger than expected. That would be a significant jump over the $47.5 billion data center revenue Nvidia reported last year.
Meanwhile, consensus estimates indicate that Nvidia’s data center revenue could increase to $140 billion next year, which would still be a significant jump over its revenue from this segment last year. For perspective, AMD is expecting to sell $4.5 billion worth of data center GPUs this year, which tells us just how dominant Nvidia has been in this market.
Given that Nvidia will be releasing a new AI GPU every year, as compared to its earlier plan of refreshing its lineup every two years, it could continue commanding a solid share of the AI chip market after 10 years. With the overall market for GPUs expected to be worth $1.16 trillion in 2034, according to Future Market Insights, Nvidia’s strong standing in this market sets it up for robust growth over the next decade.
Moreover, analysts are expecting Nvidia’s earnings to clock an annual growth rate of 42% over the next five years. That’s higher than the 13% annual earnings growth that Microsoft is expected to deliver over the same period.
Nvidia’s huge end-market opportunity and its dominant share suggest that it could keep growing at a faster pace than Microsoft beyond the next five years, potentially over the next decade. As such, it won’t be surprising to see Nvidia eventually overtaking Microsoft’s market cap after 10 years.
2. Meta Platforms
Meta Platforms is currently the seventh-largest company in the world with a market cap of $1.25 trillion, which means that it is quite some distance away from Microsoft. However, the impressive pace at which Meta has been growing recently thanks to the growing adoption of its AI-powered advertising tools suggests that it could maintain a healthy pace of growth over the next decade.
According to eMarketer, digital ad spending could increase by 13.2% in 2024. Meta is on track to grow at a faster pace than the industry it operates in. The company’s revenue in the first six months of the year increased by 24% to $75.5 billion. Its revenue forecast of $39.75 billion for the current quarter would translate to year-over-year growth of 16%, which would again be higher than the pace at which digital ad spending is forecast to grow this year.
Meta’s ability to drive greater returns for advertisers with the help of AI-powered ad campaigns is helping the company attract more ad dollars. Management said on the recent earnings conference call that U.S. advertisers witnessed a 22% jump in returns after adopting Meta’s AI-powered ad tools such as Advantage+.
These AI tools are allowing advertisers who are using Meta’s offerings to improve audience targeting, drive incremental purchases from that audience, and reduce acquisition costs. Meta witnessed a 10% year-over-year increase in ad impressions delivered in Q2, along with a 10% improvement in the average price per ad.
The global digital ad market is expected to be worth a whopping $1.76 trillion in 2034, up from this year’s estimated revenue of $467 billion, according to Prophecy Market Insights. Meta is expected to deliver $161 billion in revenue in 2024, which means that it could end the year with a third of the digital ad market under its control.
If the company continues to grab a bigger share of this lucrative end-market opportunity in the long run, its revenue could increase significantly in the future. Assuming Meta could bump its digital ad market share to 40% in 2034, its revenue could hit a whopping $704 billion. That would be more than four times the company’s projected 2024 revenue.
Given that the U.S. technology sector has a price-to-sales ratio of 7, Meta could witness a significant expansion in its market cap in the long run if it trades at that valuation. So, Meta Platforms indeed has the potential to become a bigger company than Microsoft in the coming decade thanks to its improving influence in the digital ad market.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
