1 Unstoppable Stocks That Just Might Join the $1 Trillion Club of Microsoft, Apple, Nvidia, Alphabet, Amazon, and Meta

Last year, the rapid growth of artificial intelligence (AI) surprised many investors and triggered a new generation of the world's most valuable companies.Apple Inc.end upMicrosoft CorporationDefeat.Microsoft CorporationIt is currently the only company with a market capitalization of more than $3 trillion, topping the list.Nvidia), with its industry-leading AI processor, has quadrupled its market capitalization in the past year, ranking third behind Apple with a market capitalization of $2.6 trillion.Alphabet,Amazonrespond in singingMeta Platforms Both are key contributors to the AI revolution and members of this auspicious fraternity.

supercomputerCompany ((NASDAQ resonance stock code: SMCI)With a market capitalization of just $53 billion (at the time of writing), it seems a bit of a stretch to say that it has the potential to make a run at the $1 trillion club. However, the accelerating demand for AI-centric servers and the company's decades of expertise suggest that Supermicro is a dark horse in this race.

Celebrity Server

Although Supermicro has been creating customized server solutions for more than 30 years, the company was quiet until the accelerating popularity of artificial intelligence. As it turns out, Supermicro has accumulated a rather deep heritage outside of the spotlight.

Supermicro has built its reputation by offering highly customizable, high-performance, liquid-cooled rackmount servers designed to meet the demanding requirements of AI and very large data centers. The company has established strong relationships with all of the top AI chip makers and works with them to ensure that its rack-mounted servers deliver best-in-class performance, while providing high performance and the lowest cost of ownership of total mass in the industry. The company works with Nvidia,Advanced Micro Devices respond in singingIntelThe company has established partnerships with companies such as Hewlett-Packard.

It's a winning strategy, and its AI-centric servers are flying off the shelves. In the second quarter of fiscal year 2024 (ended December 31), Supermicro's revenues grew 103% year-over-year to $3.7 billion, and earnings per share (EPS) were $5.10, up 85% year-over-year. management expects triple-digit growth to continue, and has raised full-year guidance to $14.5 billion, or 104% growth.

According to Goon, Supermicro's growth over the past 12 months has been five times the industry average, indicating that the company is gaining market share from its competitors, and analysts at Northland believe that the company's market share, which has grown to 11%, has "a lot of room to grow" in terms of share growth.

The Road to a Trillion Dollars

Supermicro has an enviable position among AI server manufacturers. The company is small and nimble, and has a long history of providing customized server solutions to enterprises. In addition, Supermicro has strong and enduring relationships with chipmakers, which provide it with internal channels and a large supply of processors for AI. Despite these strengths and obvious opportunities, Supermicro will need to do a lot of things right to join the ranks of the trillionaires.

According to Wall Street forecasts, Supermicro is on track to achieve $14.7 billion in revenue by 2024, with a forward price-to-sales ratio (P/S) of about 3.6. Assuming its P/S remains constant, Supermicro's revenue would have to grow to about $275 billion annually to support a market capitalization of $1 trillion. To be clear, the company is currently ramping up production to support $25 billion in annual sales, so it will take time to reach this revenue model.

If the company can maintain triple-digit year-over-year growth, Supermicro's market capitalization could reach $1 trillion by 2031. That said, the company is unlikely to maintain its current parabolic growth rate. If we adjust our revenue growth assumption downward to 50%, Supermicro would havelikelihoodThe market capitalization will reach US$1 trillion by 2035.

There is reason to believe that the strong demand for AI-centric servers will continue.Bank of AmericaAnalyst Ruplu Bhattacharya believes that the data center market will grow at a compound annual growth rate (CAGR) of 50% over the next three years, and that Supermicro's revenues are likely to grow even faster.

Jensen Huang, Nvidia's chief executive officer, is also bullish on the data center market, believing that in the next four to five years, the installed base of data centers will double to $2 trillion.

If Supermicro captures even a fraction of this huge opportunity, the company will soon join the $1 trillion club.

Should you invest $1,000 in Super Bird Computer now?

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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's Board of Directors. Randi Zuckerberg, former Facebook Marketplace Development Armsmaster and Spokeswoman, and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's Board of Directors. John Mackey, former chief executive of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Weiner holds shares of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Super Micro Computer. The Motley Fool's positions recommend Advanced Micro Devices, Alphabet, Amazon, Apple, Bank of America, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends Intel and also recommends the following options: Intel January 2023 $57.50 call options long, Intel January 2025 $45 call options long, Microsoft January 2026 $395 call options long, Microsoft January 2026 $405 call options short, and Microsoft January 2026 $405 call options short. The Motley Fool has a disclosure policy.

1 Unstoppable Stock Where Microsoft, Apple, Nvidia, Alphabet, Amazon, and Meta Could Join the $1 Trillion Club was originally published by The Motley Fool.