Which artificial intelligence (AI) stock is most likely to deliver a 5x return by 2030: Alphabet, Amazon, Microsoft, Meta, or Nvidia?

You don’t have to struggle to find well-known stocks that have become multibaggers in recent years. alphabet‘s (GOOG 0.78%) (Google 0.77%) The stock price has more than quadrupled since 2014. Amazon‘s (AMZN -0.83%) The stock price rose more than nine times over the same period. microsoft (MSFT -0.71%) It brought more than 10x profit. meta platform‘ (meta -1.22%) The stock price soared seven times. after that, Nvidia (NVDA -5.55%)the stock price soared approximately 19,400%.

But that impressive profit is now history. Which stock is likely to deliver a 5x return by 2030?

Strong growth prospects on all fronts

I think all five of these stocks have the potential for significant growth in the future. They all have a common tailwind that will continue to blow strong for years to come: artificial intelligence (AI).

The way I see it, Amazon Web Services, Microsoft Azure, and Alphabet’s Google Cloud are poised for significant growth as IT spending moves from on-premises to the cloud. The race to build AI capabilities should accelerate this trend. Nvidia will almost certainly be a direct beneficiary of this transition. The company’s GPUs remain popular chips for powering AI apps.

Meta is neither a cloud provider nor a chip manufacturer. But the company’s open source approach to AI development could pay off well in the long run. Meta CEO Mark Zuckerberg said the benefits of this strategy include improved AI safety and security, increased ability to integrate new AI innovations into Meta’s products, and competition in hiring the best developers and researchers. We believe that this includes the above advantages.

But AI isn’t the only driver of growth for these five stocks. Amazon still has plenty of room to expand in other growing areas, such as the e-commerce market and health care. Microsoft’s opportunities include gaming, especially with its recent acquisition of Activision Blizzard. Alphabet has well-known “other bets” such as healthcare-focused Calico and Verily. Meta has invested heavily in the development of the Metaverse. Nvidia’s initial success came from strengthening its gaming apps, which still represent a major growth market.

Refine the list

I like all of these stocks. I think both have the potential to deliver solid returns over the long term. But you’ll need to narrow down the list to choose a winner.

Which one will be eliminated first? My choice is meta. The company won’t benefit as directly from AI as the three cloud service providers or Nvidia. Meta’s big bet on the Metaverse may not pay off by 2030 (or maybe ever). While its social media platforms remain dominant, they do not have the growth potential of the past.

The next option for me is Amazon. E-commerce remains the company’s largest source of revenue. As mentioned earlier, it remains a growth opportunity for Amazon. However, the opportunity is not as great as that held by other companies on the list. This could make it even more difficult for Amazon stock to soar fivefold by 2030.

I’m reluctantly going to take Microsoft off the list as well. My main deciding factor here is rating. Microsoft’s price-to-earnings multiple (PEG), based on Wall Street’s consensus five-year growth forecast, is more than 2x, the highest multiple of any of these stocks excluding Amazon. Admittedly, these growth projections can be overly pessimistic. Still, given its starting valuation, I think it will be more difficult for Microsoft stock to rise 5x in the future.

finalist

The two finalists are Alphabet and Nvidia. It’s difficult to choose between them.

In addition to continued growth from its current apps and Google Cloud, Alphabet could be a major growth driver with its Waymo self-driving car business. Cathie Wood’s Ark Invest predicts the robotaxi market could reach a value of $9 trillion by 2030. Waymo is likely to be the market leader. Google also ranks as a top innovator in quantum computing technology, which could also be game-changing.

However, Alphabet faces several risks. Ark Invest’s robotaxi market predictions may be too optimistic. Realizing the potential of quantum computing may take much longer than anyone expects. AI-powered virtual assistants could hinder Google Search’s growth in the future. Alphabet’s “other bet” may prove disappointing.

What about Nvidia? Probably the most important company in the world today. All the other companies on our list (and thousands of others) rely heavily on Nvidia’s GPUs. CEO Jensen Huang said the transition to accelerated computing and generative AI will “double the global installed base of data center infrastructure over the next five years, creating a market opportunity worth hundreds of billions of dollars annually.” I think that will be born.” If his claims are correct, NVIDIA could realistically achieve five times the profits by 2030.

Meanwhile, Aswath Damodaran, a finance professor at New York University, believes Nvidia is the most overvalued Magnificent Seven stock of all time, even given its strong growth forecast. The company also faces increasing competition in the AI ​​chip market, which is likely to become even more intense in the coming years.

Most likely to yield a 5x return

So which stock is most likely to deliver a 5x return? I agree with Nvidia. The company should benefit from nearly every technology growth market, including AI, gaming, self-driving cars, and the Metaverse. That said, I don’t think it will be easy for Nvidia to become a 5 bagger again (due to the challenges already mentioned).

Perhaps the most important takeaway from this what-if exercise is that all of these stocks have the potential to generate significant returns for investors in the long run. I don’t think you can go wrong buying Alphabet, Amazon, Microsoft, Meta, or Nvidia as long as you hold the stocks long enough.