Reaching a $1 trillion valuation represents rarefied air even in today’s stock market. As recently as 2018, Apple became the first-ever company to cross this staggering threshold, sparking headlines across the financial world.
Fast-forward to now, however, and the trillion-dollar club hardly seems so exclusive. Currently, six U.S. corporates hold claim to 13-digit market caps:
- Apple
- Microsoft
- Alphabet
- Amazon
- Tesla
- Nvidia
Clearly, the barriers to four-comma status have lowered over the past few years as valuations across risk assets have ballooned. Yet despite easier entry requirements, the $1 trillion marker remains an exceptional feat reserved only for uniquely dominant enterprises.
So looking ahead, which companies seem poised to join the ultra-elite trillion-dollar club next?
I’ve analyzed the investing landscape rigorously to identify three leading candidates. Here’s why each deserves consideration as potential *next-trillion dollar stocks: *
Berkshire Hathaway – The Holding Company Juggernaut
When it comes to long-term investing returns, few can rival the accomplishments of Warren Buffett. Through his holding company Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), Buffett has delivered over 20% average annual gains for five consecutive decades.
Today, Berkshire sports a market capitalization approaching $800 billion. Thanks to its copious cash reserves and Buffett’s standout capital allocation abilities, the company seems well-prepared for its next growth phase targeting trillion-dollar status:
- Berkshire’s current cash stockpile tops $150 billion, providing incredible dry powder for opportunistic investments during market pullbacks. The 2008 Financial Crisis proved how Buffett capitalizes on fear.
- Wharton Business School estimates Berkshire needs roughly 5% annual returns to reach a $1 trillion valuation by 2028. Given its track record, this appears readily achievable assuming Buffett and right-hand man Charlie Munger maintain leadership in their 90s.
- Buffett has also installed a solid succession plan to preserve Berkshire’s investment magic. Executives like Ajit Jain and Greg Abel now oversee major capital deployment decisions, and they are expected to seamlessly takeover once Buffett steps down.
Between dividend income from Berkshire’s dozens of operating subsidiaries, selective stock investments, and capable leadership both now and in the future – $1 trillion looks inevitable for this storied holding company.
ExxonMobil – Oil Giant Primed for Major Growth
Like all legacy energy enterprises, ExxonMobil (NYSE: XOM) languished throughout most the 2010s as oil & gas prices remained tempered. But thanks to recovering demand, supply chain turmoil in 2022 has sent the hydrocarbons back near multi-year highs – creating a boon for integrated majors like Exxon.
Flush with tens of billions in quarterly earnings, Exxon is now primed to invest aggressively into strategic expansion initiatives. Already, management has greenlit a $60 billion acquisition of U.S. shale standout Pioneer Natural Resources (NYSE: PXD) – forming an oil & gas behemoth unmatched in production scale.
The merger deal stands poised to unlock immense synergies between Pioneer’s efficient shale operations and ExxonMobil’s technological capabilities. Analysts forecast output could reach 2 million barrels daily within a few years as more Permian drilling sites get tapped.
Between its existing scale and the current favorable macro landscape, ExxonMobil seems ready to leverage this moment fully and charge towards the four-comma valuation club before 2030, assuming oil & gas prices hold near current levels.
Walmart – Global Commerce Giant Worth Over $400B…For Now
Retail kingpin Walmart (NYSE: WMT) surely doesn’t move as quickly as its e-commerce arch-nemesis Amazon.
But what the Arkansas-based company lacks in speed, it makes up through sheer size and scale. Already the top retailer worldwide based on revenues, Walmart likely needs annual total returns around 10% to eclipse $1 trillion by 2030.
While ambitious, management appears up for this challenge based on strategic positioning:
- Walmart still tops 10,500 global store locations, cementing its supply chain and discount pricing advantages in brick-and-mortar commerce.
- Meanwhile, heavy technology investments have enhanced Walmart’s e-commerce operations significantly. Management looks to leverage emerging innovations like drones, automation, and machine learning to boost margins over the long-run.
- Walmart’s Spark Driver platform has already achieved 15% cost reductions in home delivery expenses versus rivals. And further efficiency gains seem likely as the company taps its unmatched supply chain infrastructure.
With commerce steadily moving online plus economic uncertainty on the horizon, bargain-focused retail stands poised for success. And Walmart’s competitive moats both online and offline make it the top play to capitalize.
So despite the lengthy timeline, Walmart reaching trillion-dollar status before 2035 looks quite achievable.
The Road Ahead – $1 Trillion Within Reach for These Dominant Enterprises
To recap – the thirteen-digit valuation club remains an extremely exclusive gathering in 2023. But based on financial resources, management competence, and expansion initiatives already underway – Berkshire Hathaway, ExxonMobil, and Walmart all realistically stand chances to join over the next decade or so.
Will rising interest rates or unpredictable market headwinds ultimately delay any of their trillion-dollar ascents? It’s certainly possible, if not outright likely.
Yet each enterprise above looks well-equipped to overcome adversity given their tremendous scale and defensible competitive positioning. So for investors seeking dominant brands with clear paths to four-comma valuations, Berkshire, Exxon and Walmart deserve prominent coverage on your watchlist today.
