Forecast: These Are the 2 Most Valuable Artificial Intelligence (AI) Stocks Through 2034

Microsoft, AppleAND Nvidia are the three most valuable companies in the world and the only ones in history to exceed $3 trillion in market capitalization. They will likely continue to grow in the future, especially if artificial intelligence (AI) lives up to expectations.

The global economy generated $105 trillion in output last year, but Wall Street believes AI has the potential to significantly increase that number:

• Goldman Sachs believes that artificial intelligence will create $7 trillion worth of economic activity over the next decade.
• PwC believes that AI will contribute $15.7 trillion to the global economy by 2030, with almost half of those gains coming from the ability to improve existing products.
• Ark Investment Management is the most bullish on AI, predicting that software like OpenAI’s ChatGPT could create a $200 trillion productivity boom for the global economy.

If these predictions turn out to be accurate – even at the lower end – I think Oracle (NYSE:ORCL) AND Alphabet (NASDAQ:GOOG)(NASDAQ: GOOGL) will grow to become two of the most valuable companies in the world in the next 10 years. Here’s why.

1. Oracle: Industry-Leading AI Infrastructure

Nvidia is the quintessential AI company right now because its data center graphics processing units (GPUs) are essential for building AI models. CEO Jensen Huang says data center operators could generate $5 in revenue (over four years) for every $1 invested in his company’s chips because demand for computing power is so high among AI developers.

This brings me to Oracle, which offers one of the world’s best AI data center infrastructures. It has developed a unique RDMA (random direct memory access) networking technology that moves data from one point to another much faster than competing Ethernet networks, which translates into faster AI development at lower costs.

In addition, Oracle’s SuperCluster technology will soon enable developers to scale their compute power to 65,536 Nvidia GPUs. By comparison, the best infrastructure in Amazon Web Services now offers clusters of up to 20,000 GPUs, making Oracle the go-to destination for developers building the largest and most complex AI models.

By the way, Oracle’s remaining performance obligations (RPO) grew 44% year over year to a record $98 billion in the final fourth quarter of fiscal 2024 (ended May 31), which included $12.5 billion in new AI deals. Leading AI startups like OpenAI and Elon Musk’s xAI are just a few of the developers in line for more compute power from Oracle.

The company reports data center revenue in its Oracle Cloud Infrastructure (OCI) segment, which came in at just $2 billion this quarter, up 42%, putting the massive backlog into perspective. The company is building new data centers to meet demand, which will translate into higher RPO revenue in OCI. Management expects gross profit margins to improve as it opens more locations due to their highly automated nature.

At the time of writing, Oracle is valued at $399 billion, but its stock is trading at a steep discount to the AI ​​leaders. Microsoft, Apple, and Nvidia are trading at an average price-to-earnings (P/E) ratio of 49.7, while Oracle’s P/E is just 26. I’m not suggesting that will happen, but theoretically its stock would need to rise 91% to catch up. That would catapult its valuation to $762 billion.

Oracle has grown its profits at a compound annual rate of 8.9% over the past 10 years. However, the company’s RPO growth alone could drive profits above trend in the coming years, especially since margins are expected to improve with scale.

If, for example, profits grow by 15% annually over the next 10 years and the P/E matches other AI giants, the market capitalization could exceed $3 trillion. Wall Street is already forecasting 15% profit growth in fiscal 2026.

Several assumptions must be met for this scenario to come true, but joining the trillion-dollar club would make Oracle one of the largest AI companies in the world.

2. Alphabet: A World-Class AI Software Company

Alphabet is the parent company of tech giants like Google, YouTube, Waymo, and DeepMind. The conglomerate is already valued at $2.3 trillion, so it doesn’t need to create as much value as Oracle to be one of the world’s biggest companies in 2034. But it does need to overcome AI disruption in its core business.

Google search accounts for more than half of Alphabet’s total revenue. It is an attractive destination for advertisers because of its dominant 91% market share in the internet search industry.

But AI chatbots like ChatGPT pose a threat because they offer a faster, more direct, and more convenient way to get information. Microsoft integrated ChatGPT with its Bing search engine for precisely this reason.

Alphabet has launched a series of its own AI chatbots over the past year, culminating in the Gemini family of models, which are its most advanced yet. In addition, generative AI is handling a growing number of Google Search queries by generating text responses at the top of the page so users don’t have to search through web pages for answers.

Early signs suggest the move is protecting Google’s dominant position, as the company’s advertising revenue rose 14.3% year-over-year in the first quarter of 2024 (ended March 31), the fastest growth in nearly two years.

Beyond search, Gemini opens the door to several new possibilities. For example, Google Workspace is a popular productivity platform that offers Gmail, Docs, Sheets, and more.

Businesses pay $12 per user per month for the standard Workspace plan, but can now add Gemini for another $20 per user per month. It acts as an AI assistant capable of quickly creating text and image content, which can boost productivity in any organization.

With over 9 million companies paying for Workspace (with a handful of individual users in each), Gemini could be a significant financial opportunity for Alphabet.

Like Oracle, Google Cloud also offers a powerful AI data center infrastructure to the developer community. In addition, the platform offers over 130 pre-built large language models (LLMs), including Gemini, that developers can use to build their own AI applications.

Alphabet says more than 60% of generative AI startups are Google Cloud customers, a number the company aims to increase by offering the latest Nvidia GPUs in addition to the chips Alphabet designs in-house.

The stock is trading at a P/E of 29.4, making it cheaper than the average AI leader. The company grew its earnings by 27% in 2023, and Wall Street expects growth to remain above 20% in 2024.

At this rate, Alphabet will likely be one of the largest AI companies in 10 years. Even if the company grows its earnings at an average of 10% over the next decade, it will amass a market capitalization of $6.5 trillion if its current P/E remains constant.

Is it worth investing $1000 in Oracle now?

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no ownership interest in any of the stocks mentioned. The Motley Fool owns shares in and recommends Alphabet, Amazon, Apple, Goldman Sachs Group, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.