I used to know some guys who met before the beginning of each college football season. They would predict how their respective teams' seasons would likely go.
The more they drank, the rosier the predictions would get. By the end of the night, at least one of them would predict that his favorite barely above-average team would play for the national championship.
The most heavily inebriated predictions never came true, of course. However, some of the ones made earlier in the evening, when everyone's thinking was clearer, often did.
I bring all of this up because I'm about to make my own predictions -- not about college football, but instead, about stocks. And I won't look through rose-colored (or adult beverage-filled) glasses. These will be the three largest stocks by 2030, in my opinion. (Note: I'm limiting my predictions to stocks traded on major U.S. exchanges.)
Image source: Getty Images.
1. Apple
Sometimes, the obvious answer is the right answer. Apple (AAPL 0.40%) ranks as the biggest stock today, based on market cap. I think it will remain at the top of the mountain in 2030.
How will Apple be able to hold onto its lofty perch? It will require more than just minor improvements to new iPhone models. I don't expect the company to be that conservative.
I predict that Apple will release a foldable iPhone that will be wildly popular. However, that won't be its biggest innovation. Look for Apple to launch augmented reality (AR) glasses that will at first be an expensive novelty. But by the end of this decade, I won't be surprised if the company has much less costly versions with impressive functionality.
Apple Pay could be another important growth driver for the company. CFO Luca Maestri noted in the company's recent quarterly update that "a record-breaking number of purchases" were made using the digital-payment service during the holiday shopping season.
Don't overlook the role that artificial intelligence (AI) might play in Apple's growth. When asked about the company's AI strategy in the fiscal 2023 Q1 conference call, CEO Tim Cook responded that AI "will affect every product in every service that we have."
2. Microsoft
Microsoft (MSFT 0.15%) currently sits at No. 2, based on market cap. My initial inclination was to predict that the tech giant would lose a spot or two by 2030. However, the more I thought about it, the more I realized that Microsoft is likely to hold onto its position, albeit by a much narrower cushion than it enjoys today.
The best thing that Microsoft has going in its favor is that it's involved in so many hot growth areas. I anticipate that the company will continue to dominate the office productivity market. It will probably also capture a greater market share in the cloud hosting market with its Azure platform.
I'm skeptical that Microsoft's planned acquisition of Activision Blizzard will close, due to regulatory opposition. But I still expect the company will remain a major player in the gaming world with Xbox.
Microsoft is making a huge investment in AI, notably including its stake in OpenAI. I don't expect that the company's Bing search engine will topple Alphabet's (GOOG 0.80%) (GOOGL 0.83%) Google, even with ChatGPT integration. However, I do predict that Microsoft's AI tools will further cement its position in corporate IT departments.
3. Alphabet
I had a hard time deciding whether to go with Alphabet (which currently ranks in third place) or with Amazon (AMZN 2.19%). My hunch is that it's going to be really close between the two. Amazon could slip past Alphabet by 2030. If so, the key differentiator could be Amazon's improving profits and free cash flow.
But I ultimately went with Alphabet. Why? It boils down to two letters: A and I.
Sure, Amazon is a formidable AI leader in its own right. However, I think that OpenAI's ChatGPT threat has stirred the Google dragon. And I look for the dragon to start breathing fire soon.
Alphabet has an opportunity to win developers' hearts and minds with its rival LaMDA AI technology. Integrating LaMDA-based Bard into Google Search won't result in lost advertising revenue, in my view. I fully anticipate that Alphabet will be able to monetize the AI app.
Don't forget Alphabet's Waymo unit, either. The adoption of AI-powered self-driving car technology will increase significantly by the end of the decade. Waymo is likely to be one of the biggest winners.
Is bigger better?
No, bigger isn't always better. In this case, though, I think that the biggest stocks of 2030 will make investors solid returns between now and then.
Apple, Microsoft, and Alphabet (I'd throw Amazon in there with them, too) might not be 10-baggers as some smaller stocks will be. But these already huge companies have plenty of room to run.
