Forecast: 2 Artificial Intelligence (AI) Stocks That Could Be Worth More Than Apple in 5 Years

Apple is currently the most valuable company in the world, with a market capitalization of $3.4 trillion, but it is closely followed by two other technology giants, Microsoft (MSFT 1.64%) AND Nvidia (NVDA 0.69%)It’s worth noting that both Microsoft and Nvidia took turns becoming the world’s most valuable company this year, but Apple managed to regain its leading position thanks to a recent surge in its stock price.

However, if we compare Apple’s prospects to those of Nvidia and Microsoft over the next five years, it’s no surprise that they’ll become more valuable than the iPhone maker. Here’s why.

1.Microsoft

Microsoft’s $3.3 trillion market capitalization means it’s now strikingly close to Apple. More importantly, Microsoft is growing faster than Apple, a trend that’s likely to continue over the next five years, thanks to the growing adoption of artificial intelligence (AI) in many markets.

For example, Microsoft’s revenue in the third quarter of fiscal 2024 (which ended March 31) rose 17% year over year to $61.9 billion. Meanwhile, Apple’s revenue in the second quarter of fiscal 2024 (the three months ended March 30) fell 4% year over year to $90.8 billion. This glaring difference in the two tech giants’ performance is largely due to AI.

While Microsoft is capitalizing on many AI-driven growth trends, such as cloud computing, personal computers (PCs) and workplace collaboration tools, Apple has been a latecomer to the AI ​​smartphone market. Microsoft’s Intelligent Cloud segment saw revenue grow 21% year over year in the fiscal third quarter to $26.7 billion, driven by growing adoption of cloud-based AI services.

The company said its Azure cloud business grew 7 percentage points thanks to AI. The cloud-based AI services market is expected to generate $647 billion in revenue in 2030, growing at a compound annual growth rate of nearly 40% through the end of the decade, and Microsoft has a potentially big opportunity to grow revenue in this market.

In addition, Microsoft Azure’s 25% share of the cloud computing market means it is well-positioned to capitalize on this multi-billion-dollar AI opportunity. But that’s not the end of AI-driven catalysts for Microsoft. The company’s generative AI chatbot Copilot, which serves both consumer and business users, is enjoying strong adoption.

For example, Microsoft Copilot for GitHub, a developer platform used by more than 100 million users, boasted 1.8 million paid subscribers at the end of March. Meanwhile, enterprise adoption of Copilot to boost workplace productivity remains solid, as CEO Satya Nadella put it:

This quarter, we made Copilot available to organizations of all types and sizes, from enterprises to small businesses. Copilot is now used by nearly 60% of the Fortune 500. We’ve seen accelerated adoption across industries and geographies, with companies like Amgen, BP, CompetentKoch Industries, Moody’s, New NordiskNvidia and Tech Mahindra buy over 10,000 seats.

Microsoft charges enterprise customers $30 per month per user for its Copilot. The individual plan is priced at $20 per month per user. The company is already monetizing the AI ​​assistant market, which is expected to grow eightfold over the next decade and generate nearly $167 billion in revenue by 2033.

The AI-related factors above are why Microsoft’s annual profits are expected to grow by 16% annually over the next five years, while Apple’s forecast is 10%. This could ultimately help Microsoft stock achieve greater growth and become more valuable than Apple’s stock in the long run.

2.Nvidia

Nvidia is now the world’s third-largest company, with a market capitalization of $3 trillion. The semiconductor specialist’s shares have surged an impressive 745% since the start of 2023, as companies like Microsoft and other tech giants have sought to acquire its AI graphics processing units (GPUs) to train and deploy AI models and services.

More importantly, Nvidia controls over 90% of the AI ​​chip market. This incredible market share is the reason for its extraordinary growth in recent quarters, which has translated into significantly better financial results than Apple.

AAPL revenue data (TTM) by YCharts.

With the global AI chip market expected to grow tenfold over the next 10 years to a $300 billion market, there’s a good chance Nvidia’s stellar growth will continue. According to some analysts, the company’s data center revenue alone could grow to $280 billion over the next four years, up from $47.5 billion in the previous fiscal year.

Add in additional catalysts like the PC market’s revival thanks to AI-enabled PC adoption (which has begun to boost Nvidia’s gaming business), and it’s easy to see why analysts are estimating Nvidia’s profits will grow 46% annually over the next five years. That’s significantly faster than Apple’s growth expected to be over the same period.

Sure, Apple could get a boost from the advent of AI smartphones, but investors should note that the company operates in a very competitive market. In the second quarter of 2024, Apple’s smartphone market share was 15.8%, up from 16.6% in the same quarter of 2023. Its shipments were up just 1.5% year over year compared to the overall smartphone market growth of 6.5%.

It’s easy to see why Nvidia’s growth should be faster, as it’s the leader in AI chips, while Apple operates in a crowded space where rivals have been eager to jump on the AI ​​bandwagon. As such, it’s possible that Nvidia will overtake Apple in market share over the next five years, thanks to faster profit growth, and AI will play a key role in helping the semiconductor company achieve that goal.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, BP, Microsoft, Moody’s, and Nvidia. The Motley Fool recommends Amgen, Cognizant Technology Solutions, and Novo Nordisk and 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.