META

Meta Platforms, Inc.

134.40
USD
-1.44%
134.40
USD
-1.44%
134.12 353.83
52 weeks
52 weeks
Chat
Send me real-time posts from this site at my email

Prediction: 3 Stocks That Could Be Worth More Than Microsoft by 2040

The stock market offers few certainties, with one exception: Change. Over time, innovation, competitive advantages, acquisitions, legal judgments, and a host of other factors, are responsible for reshuffling Wall Street's leaderboard. In other words, today's largest companies should look vastly different come 10 or 20 years from now. For example, General Electric, Cisco Systems, Lucent Technologies, and Nokia, the latter of which would go on to acquire Alcatel-Lucent in 2015, were all among the 10 most-valuable publicly traded companies in 1999. Some 23 years later, GE has dropped to No. 127, Cisco has fallen to No. 44, Lucent isn't even a publicly traded company anymore, and Nokia has plunged all the way to No. 391. The same fate could await many of today's largest companies -- even tech giant Microsoft (NASDAQ: MSFT). Microsoft has been a fixture as one of the world's largest companies For the moment, Microsoft is the second-largest publicly traded company in the U.S. ($2.1 trillion market cap). It's also the only stock from the 1999 list to still retain a position among the 10 most-valuable companies today. One of the reasons Microsoft has been such a success is its legacy operations. For instance, Windows is no longer the growth segment it was for the company during the 1990s and 2000s. Nevertheless, Windows accounts for more than 76% of global desktop operating system market share. The high margins associated with selling software on PCs generates abundant cash flow that Microsoft can funnel into high-margin initiatives and/or acquisitions. In particular, Microsoft has used its incredible cash flow and rock-solid balance sheet -- Microsoft is one of only two publicly traded companies to sport the highly coveted AAA credit rating from Standard & Poor's, a division of S&P Global -- to invest in the cloud. Microsoft Azure has grown into the world's No. 2 cloud infrastructure provider and sustained a constant-currency growth rate near 50%. These could be three of the world's largest stocks by 2040 But even great companies can lose their luster. Although Microsoft's cash flow, balance sheet, and cloud-service growth indicate it can still be a great long-term investment, other stocks have the innovative capacity to potentially top Microsoft's market cap. What follows is a prediction of three diverse stocks that could be worth more than Microsoft by 2040. The logical choice: Amazon The no-brainer choice to surpass Microsoft and become one of the largest companies in the world is e-commerce stock Amazon (NASDAQ: AMZN). As of Aug. 9, 2022, Amazon shares would need to gain around $700 billion in market value to eclipse Microsoft. Most consumers are familiar with Amazon because of its absolutely dominant online marketplace. An eMarketer report from March 2022 projected that Amazon would account for just shy of 40% of all online retail sales in the U.S. this year. To boot, the company sold more than 300 million items during its July 12-13 Prime Day event. It's a retail juggernaut that towers over its competition. Yet, it's not Amazon's highest revenue segment that can help it surpass Microsoft in market value. Rather, it's the ancillary operating segments and sales channels that are expected to deliver the bulk of its profit growth and cash flow. For instance, Amazon's leading marketplace has helped it attract more than 200 million Prime members. At minimum, 200 million people paying the annual membership fee of $139 are bringing the company close to $28 billion in higher-margin annual sales. Subscription-service revenue should help Amazon grow its logistics network, undercut brick-and-mortar retailers on price, and funnel cash to other high-growth initiatives. Arguably the top growth initiative for Amazon is its world-leading cloud infrastructure segment, Amazon Web Services (AWS). AWS accounted for 33% of global cloud-service spending in the first quarter, and has been responsible for the lion's share of Amazon's operating income, despite accounting for only 15% to 16% of the company's net sales. Even if Amazon's retail sales were to stagnate, growth in AWS and other high-margin segments could propel the company's cash flow many multiples higher. If investors are willing to pay 30 times annual cash flow for Amazon -- this is the median year-end premium investors paid for Amazon throughout the 2010s -- its market cap could surpass $4.2 trillion by the end of 2025. If everything went just right: Meta Platforms A second stock with the innovative capacity to leapfrog Microsoft, assuming a number of things went right, is social media stock Meta Platforms (NASDAQ: META). To see Meta's name on this list might be shocking considering how poorly it's performed in 2022. Shares of the company have lost over half their value as historically high inflation and back-to-back quarters of U.S. gross domestic product (GDP) contraction weigh on advertising revenue. However, a momentary hiccup in the U.S. economy shouldn't scare away patient investors. Meta is a behemoth in the social media space. Facebook, Instagram, WhatsApp, and Facebook Messenger, which are all owned by Meta, are consistently among the most-downloaded apps domestically and internationally. During the second quarter, the company recognized 3.65 billion monthly active users across its family of apps. Considering that most of these users are adults, it means Meta is attracting over half the world's adult population to its sites at least once a month. With this sort of visibility, it's no wonder Meta Platforms is able to command such impressive pricing power. Advertising is a cyclical industry, which means economic downturns hurt ad spending. However, the U.S. and global economy spend a disproportionately long amount of time expanding. This means Meta's ad revenue and pricing power should easily climb over time. The real wildcard for Meta is the company's metaverse ambitions. The "metaverse" being the next iteration of the internet that allows connected users to interact with each other and their environment in a 3D virtual world. It's going to be years before the infrastructure is in place to support the metaverse. But when it is in place, Meta has an opportunity to be a leading on-ramp to this potentially $30 trillion opportunity. If all goes right, it very well could surpass Microsoft. The longshot: PayPal Holdings The longshot to eventually put Microsoft in the rearview mirror by 2040 is fintech stock PayPal Holdings (NASDAQ: PYPL). PayPal has a $114 billion market cap, so it has quite a bit of ground it'll need to gain on Microsoft over the coming 18 years. Although digital payments have been around for more than a decade, growth remains in the very early stages. A report from The Insight Partners forecast global digital payment growth of 15.4% per year between 2021 and 2028. With few exceptions, PayPal has been completely trouncing this growth projection. For example, PayPal managed to grow the total payment volume (TPV) on its network by 13% on a constant-currency basis during the second quarter. As noted, U.S. GDP has retraced in back-to-back quarters, which many investors would label as a "technical recession." If PayPal can maintain double-digit TPV growth with historically high inflation pulverizing the lowest decile of earners and the U.S. economy clearly weakening, consider how quickly it can grow during long-winded periods of economic expansion. As I've previously pointed out, PayPal's greatest attribute might be its user engagement. When 2020 came to a close, active accounts averaged 40.9 transactions over the trailing-12-month (ttm) period. As of June 30, 2022, active accounts averaged 48.7 transactions over the ttm. Even with economic weakness plainly evident, digital users are more engaged with PayPal's platforms than ever before. Since this is predominantly a fee-based company, more engagement should yield steadily higher profits. Acquisitions could play a key role in PayPal's future as well. The company purchased Japan's buy now, pay later (BNPL) service Paidy last year to give consumers more payment flexibility. Additional acquisitions in the e-commerce or BNPL space shouldn't be ruled out, and could be pivotal to PayPal's (possible) ascension to one of the world's largest companies by 2040. 10 stocks we like better than Microsoft When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Microsoft wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of July 27, 2022 John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. 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. Sean Williams has positions in Amazon, Meta Platforms, Inc., and PayPal Holdings. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Meta Platforms, Inc., Microsoft, PayPal Holdings, and S&P Global. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue